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2008 Canadian budget a boon for entrepreneurs

Gues Blogger 2

By Peter Kemball

In its 2008 budget released last week, Canada’s Conservative government proposed beneficial changes for entrepreneurs, angel investors and venture capitalists seeking to create wealth by building businesses from the foundations upward.

When laying the foundations of a business, Canada’s Scientific Research and Experimental Development Program (SR&ED) tax refunds earned by early-stage technology firms are a vital source of cash. By allowing for 10% of all wages and salaries paid to Canadian residents for work performed outside Canada to be claimed, Budget 2008 will help improve cash flow. This change eliminates the ludicrous anti-marketing result of not allowing those expenses when experimental development work is conducted on export customer premises.

Budget 2008 also raised the limit of qualified expenditures for Canadian-controlled private corporations from $2 million to $3 million. However, the budget continued the anti-growth-rate policy of reducing the qualified expenditures amount for companies with taxable income of $400,000 or more, and phasing it out for those with taxable income of $700,000 or more.

Another addition to Budget 2008 was the introduction of tax-free savings accounts (TFSA). In brief, starting next calendar year, individuals can contribute up to $5,000 annually from after-tax income to a TFSA. Funds can be withdrawn, tax-free, at any time, positioning this new savings vehicle at the opposite end of the spectrum from registered retirement savings plans. The latter lets money to be put aside to invest before taxes are paid but requires taxes to be paid upon withdrawing funds.

This new initiative has potentially eliminated the capital gains tax for entrepreneurs and angel investors. Was introduction of the TFSA brilliantly accidental, or a sound implementation in support of the role assigned to entrepreneurs in the government’s science and technology strategy? Used in this way amongst other possible purposes, it would put the returns from investing in early-stage ventures on the same footing as winning the lottery. As a U.S. ambassador once observed, a country that valued entrepreneurship would not tax capital gains while leaving lottery winnings tax-free. Introduction of the TFSA meets the National Angel Organization’s request for support, albeit in a way akin to the relationship between the RRSP and the TFSA.

Finally, Budget 2008 appeared to remove a long-standing barrier to investment in Canada by U.S. venture capitalists, the infamous Sec 116 requirement that each investor provide Canada Revenue Agency a certificate that taxes are not due. This effectively prevented them from being rewarded for success and beating the odds against creating significant wealth.

What could Budget 2008 have done to really reinforce its hidden subtext of rewarding entrepreneurial success? You be the judge. Go to http://www.fin.gc.ca/activty/consult/sred_e.html where submissions provided to the consultation on the SR&ED Program before November 30, 2007 are being posted. When the government meets its commitment to posting all public submissions, review them and decide for yourself whether or not the SR & ED changes are a big “Eh” or a D. Given the Tory promises in respect of the capital gains tax, would an accountability review grade the budget as an Eh!+, a gentlemen’s C, or a D from the perspective of supporting implementation of the commercialization goals of the S&T policy?

Of course all of this would not be necessary if we were to enact the Tax Lawyers, Accountants and Economists Unemployment Act. Its key provisions would be a 15% tax rate on income, coupled with a capital gains exemption on a continuously declining daily basis, reaching zero at the end of a decade. Then the only questions for debate would be the amount of the basic exemption and the GST percentage. This won’t work, of course, except it is already available in competing countries.

Peter Kemball is CEO and founder at Acorn Partners, an innovative firm that helps B2B SMEs finance their success.

Components of an integrated PR program: Media monitoring

media monitoring

By Linda Forrest

In today’s instalment of my series about the various components of an integrated PR program, I will shed some light on the reasons for media monitoring as well as different approaches and tools.

What is media monitoring? Just that – scanning media coverage for specific keywords and issues and presenting them to clients in the format that will best meet their needs. A more in-depth monitoring of the media is called content analysis, a topic that Francis will explore in detail in a future post.

How is media monitoring done? What tools are needed? At inmedia, we subscribe to a broad range of tools and have others at the ready, should specific requirements dictate a need for audio or video copies of coverage. In the main, we monitor print coverage ourselves through tools such as eWatch, Factiva, and Infomart. Should we require broadcast clippings, we use a company called Cision to provide us with copies of the footage. The print monitoring tools to which we subscribe cost a considerable amount. By having your agency do your media monitoring for you, the cost can be amortized over the entire client base that is utilizing the service, allowing clients the benefits of the tools without covering the entire cost. Consumer-grade, user-friendly search engines like Google News do allow for the search of a subset of the media, but do not cover the broad range of domestic and international or subscription-based publications like the tools that I mentioned earlier.

Why do media monitoring? The media are covering key issues that impact your business. If your company hopes to stay abreast of critical issues, competitor activities and its own image in the marketplace, media monitoring can help provide insight into these issues. By keeping up-to-date on current coverage in your space, opportunities can present themselves for your company to get involved in the dialog in the media. We can easily see if the company executives’ expert opinions differ from those of the author, or if there’s a valuable perspective to share, or perhaps an angle not covered in the original story. These timely opportunities are impossible to predict and present good chances for your company to get covered in target media and position your team as experts.

What keywords should we be using in our monitoring efforts? Obviously, the effectiveness of media monitoring can extend well beyond a simple search for your company’s name. At the outset of an ongoing program, if it is determined that media monitoring will be a component of your program, you and your team should work together to develop objectives for your media monitoring in terms of what you’re hoping to achieve. Do you want to be kept up to date on issues in your marketplace? What about regulations that impact your company or its customers? Perhaps you want to ensure that you are aware of competitor news as it happens. Once the goals have been determined, a list of relevant keywords can be programmed into these tools and then reports issued to your agency as coverage occurs, or at set intervals (for example, the start of every work day.)

How are media hits reported to the client? This really depends on the needs of the client and the resources available. Typically, we find that a biweekly report that covers the topics and issues specific to that client meets our clients’ needs, with important breaking news forwarded on an as-it-happens basis. This is variable, based on the client’s needs. With more intensive programs with extensive resources and where there’s a need for instant access to information, we have generated daily reports. At the other end of the spectrum, some of our clients do not have a specific requirement for media monitoring and therefore we only report coverage of our clients, as needed. Make sure to discuss with your agency what works best for you and will meet your requirements.

Late last year, Jill gave some tips on media monitoring in one of her posts. For more specific information than I’ve given here today, reference her tips for maximizing the value of your media monitoring efforts.

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