There are a variety of tax credits designed to stimulate the arts across Canada. In particular, there are a number of provincial tax credits for book publishing companies. If you do the accounting for any publishers, you may want to check out some of these programs.
British Columbia Book Publishing Credit
British Columbia’s book publishing tax credit beefs up the support publishers receive from the federal Canada Book Fund. To qualify for this credit, your client must be a Canadian-controlled corporation permanently established in BC. As of 2018, this refundable credit is worth 90 percent of the contribution from the Canada Book Fund, and your clients can claim the credit on their T2 (Corporation Income Tax Return). For example, if they receive $1,000 from the federal fund, they earn a provincial credit of $900.
Quebec’s Book Publishing Tax Credit
Worth up to $437,500, this credit is for publishing businesses based in Quebec and recognized by the Société de développement des entreprises culturelles. Your clients claim this credit against preproduction, printing, and labour expenses related to publishing books, comic strips, and poetry collections. Before claiming the credit, your clients need to obtain a certificate from the SODEC.
Ontario Publishing Credits
This refundable tax credit helps to offset the costs of printing and marketing books as well as prepress expenses. To qualify, businesses must be Canadian-controlled corporations permanently established in Ontario. They must devote at least half of their taxable income to the province and publish at least two books per year. The books should be by Canadian authors, and if it’s a collaborative work, at least 90 percent of the book must be by Canadians. Your clients can claim this credit for fiction and nonfiction works including books for both adults and children. As of 2018, the credit is for 30 percent of eligible expenses up to $30,000 per book. Your clients must pay an application fee equal to 0.15 percent of eligible expenditures, with a minimum fee of $50 and maximum fee of $200.
Book Publishing Credits in Manitoba
Manitoba also offers a provincial tax credit to book publishers. Again, the publisher must be based in Manitoba, and the credit is for salaries paid in Manitoba for editing, designing, researching, typesetting, and similar tasks. As of 2018, the company must pay 25 percent of its labour costs to residents of Manitoba, and it must have published at least two books recently. The credit is worth up to $100,000 per year per publisher, and if publishers opt to print their work on paper with at least 30 percent recycled content, they can claim an additional credit worth 15 percent of their printing costs.
Prince Edward Island Credit
As of 2018, Prince Edward Island is another province that offers special credits for publishers. This credit is for companies focused on book publishing as their main activity with at least three books published in the last year. Books can be fiction, literary nonfiction, children’s books, or poetry. For nonliterary nonfiction books to qualify, they must be related to Prince Edward Island. Your clients can claim a credit of 40 percent of eligible costs, worth up to $15,000.
These valuable credits can lower your clients’ tax bills, and in provinces where the credits are refundable, they can even put money in your clients’ pockets. If your clients don’t qualify for these credits, help them explore similar credits, and always be aware of new developments. Both federal and provincial governments are constantly adding new credits in an attempt to encourage artistic expression.