2017-04-05 00:00:00TaxesEnglishLooking for ways to lower your tax liability? See if you qualify for the diverse investment tax credit. Both individuals and corporations...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/Business-Owners-May-Claim-Investment-Tax-Credit-On-Equipment-Purchases.jpghttps://quickbooks.intuit.com/ca/resources/taxes/claim-investment-credit/Claim the Investment Tax Credit

Claim the Investment Tax Credit

1 min read

Canada’s investment tax credit (ITC) can be a valuable credit if your business qualifies, and there are several different ways to qualify for this credit. These can include investing in apprentices, buildings and equipment, and research and development.

Apprenticeship With the Investment Tax Credit

Hire eligible apprentices from certain trades to earn up to 10% of the apprentice’s salary, up to $2,000, as an investment tax credit per apprentice. An eligible apprentice comes from a prescribed trade and is in the first two years of an apprenticeship contract. Apprentices must register with the CRA.

New Buildings, Machinery, or Equipment in the Atlantic Region

You may also qualify for the investment tax credit if you invest in new buildings or machinery for use in farming, fishing, logging, or manufacturing in the Atlantic region of Canada. Your investment must be a qualified property, which means these are new assets available to companies in these industries and in the Atlantic region. You can claim 10% of your investment for this deduction.

Scientific Research and ITC

You can also qualify if you have spent money on certain types of scientific research and development. Your business can claim up to 35% of the expenditures, capping at $3 million, so long as your investment goes towards research that either has a specific application in mind or generally advances the knowledge and tools you have at your company’s disposal.

Claiming the Investment Tax Credit

As a small business owner, use Form T2SCH31 to claim the investment tax credit. You should file this form with your T2 corporate return. If you forget to apply for the investment tax credit, you can file this form retroactively within 12 months of submitting your return. After that point, you need to go through the process of amending your return. If you don’t want to use all of the credit in the tax year you incurred the expenses, you may roll the credit back three years or forward 20 years. For example, if you earn a $2,000 credit but you don’t owe any tax this year, you may want to save the credit and use it in the future.

QuickBooks allows you to track expenses and investments to make tax time easier, especially as you look for write-offs and deductions. QuickBooks Online can help you maximize your tax deductions. Keep more of what you earn today.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Understanding the Small Business Deduction

As a small business owner in Canada, you can claim a number…

Read more

Little Known Tax Refunds and Credits for Your Small Business

As a small business owner or freelancer, you have access to a…

Read more

How to File Self-Employed Taxes

When you’re self-employed, you have different tax responsibilities than a traditional employee.…

Read more