Tax season is a stressful time, but we shouldn’t forget the great opportunities that come along with it – tax breaks or benefits.
There are many tax credits available to businesses, but finding the tax credits applicable to you can be time consuming and confusing. So, we’ve done the work for you and created a list below of available federal credits in Canada.
What is a tax credit?
First and foremost, it’s important to understand that a tax credit and tax deduction are not the same thing.
A tax credit is an amount of money that can be subtracted directly from taxes owed to the CRA, while a tax deduction decreases your tax liability by lowering the taxable income. Tax credits are designed to encourage activities that the government has deemed important – that’s why they cover anything from film and video production, to logging and forestry.
In addition to federal tax credits, there will be different tax credits available to you depending on the province in which you operate. Knowing this, it’s important to do your research and apply for as many as you’re eligible for.
Federal tax credits for businesses in Canada
The Government of Canada provides a variety of tax credits for businesses. Below is a list of the most common credits you could pursue:
- Scientific Research and Experimental Development (SR&ED) Tax Credit – The SR&ED Program is a tax incentive program that encourages businesses to conduct their research and development within Canada. It is perfect for corporations that have large amounts of overhead costs in R&D projects. You could receive between 15-40% of project expenses depending on the province and eligibility. Read more about SR&ED here.
- Canadian Film or Video Production Tax Credit (CPTC) – Canada has a great opportunity right now to boost its economy by taking advantage of the opportunities for growth within the film and video production industry. Eligible video productions can receive up to 25% of their qualified labour expenditures through this credit. Read our blog post all about film tax credits here!
- Apprenticeship Job Creation Tax Credit (AJCTC) – This tax credit program is an investment in the Canadian workforce. It allows the business to claim up to 10% of an apprentice’s salaries and wages. By hiring an apprentice, the business is keeping jobs in Canada and investing in the future of the country’s workforce.
- Investment Tax Credit (ITC) – You may be eligible to receive the Investment Tax Credit if you have made any type of investment in your Canadian business. This includes purchasing new buildings, machinery, equipment, hiring an apprentice, and even participating in SR&ED activities.
- Input Tax Credits (ITCs) – The input tax credit allows you to recover your GST/HST costs on purchases related to commercial activities. Some common eligible purchases include business start-up costs, rent, travel, and fuel costs.
These are just a few of the available tax credits that may take some of the weight off your shoulders as a business owner. We do recommend that you discuss with your accountant or a qualified professional to find the tax credits that work best for you.
Have you received a tax credit and would like to get to work, but haven’t received the funding yet? You may qualify for our grant financing program – check it out here. If you have any questions don’t hesitate to reach out to us at [email protected].
