Grants are often competitive, always discretionary and a successful application is not guaranteed. Businesses can benefit from dedicated assistance and support to identify such grants, triumph in the application process, manage the ensuing project effectively and satisfy funding compliance requirements.
As governments are keen to see solutions to the COVID-19 crisis come to market quickly, many have launched dedicated funds to that end and companies that offer innovative changes to products, manufacturing processes and buildings may be eligible to receive grant funding.
Cash tax planning
Many cash tax planning strategies relate to how best to utilize the aforementioned recent legislative initiatives, while others look to traditional tax planning opportunities to increase liquidity and otherwise reduce or defer tax liabilities. Businesses can increase their available cash by applying these methods to prior year tax returns (including to-be-filed 2019 returns) to receive refunds or by applying them in current periods to reduce estimated or future tax payments.
The procedural mechanism to apply these methods, whether a special claim form, an accounting method change request or even an amendment to a tax return, vary not only by jurisdiction, but more importantly by what is most advantageous to the taxpayer. Extensive modeling that evaluates every position and procedural opportunity is therefore key to achieving the best result.
Modeling is even more critical for US taxpayers where recent tax reform reduced the corporate rate from 35% to 21%, creating a unique opportunity for corporations to carry back a current loss to a 35% year.
Top cash tax planning methods for all taxpayers to consider include:
- Deferring income: Identify items that are properly excludable from taxable income, defer advance payments, limit income acceleration by analyzing income recognition methods.
- Accelerating deductions: Review the timing of expense deductions — including prepaid expenses or prepaid services or property and evaluate recovery periods to accelerate depreciation or amortization.
- Fully utilizing losses: Recognize built-in losses on depressed asset values, evaluate bad debts that can be written off and review transfer pricing policies to ensure equitable sharing of current losses within the supply chain.
In addition to income taxes, consider your value-added tax (VAT) and goods and services tax (GST) positions and promptly reclaim any overpayments. Many governments have accelerated or simplified this process.