Duggal Professional Corporation

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CPA

Tax Incentives Your Small or Mid-Size Business Could Be Missing

Did you know there are tax incentives your small or mid-size business could be missing in Canada? According to a recent Canadian Chamber of Commerce study, many businesses are not taking advantage of all the available tax credits and deductions. This means they are paying more taxes than necessary and missing out on potential growth opportunities. So what are these tax incentives, and how can your business take advantage of them? Keep reading to find out.

 

The Small Business Deduction

 

The small business deduction is a tax incentive allowing small businesses to pay less tax on their first $500,000 active business income.

 

The $500,000 annual limit can be claimed in a single corporation or shared amongst other CCPCs that are associated for income tax purposes. In general, associated corporations share some degree of common control within a related group of shareholders.

 

The rules contain a restriction in claiming the small business deduction based on size, which is triggered when the taxable capital of a CCPC, together with the taxable capital of associated corporations, exceeds $10 million at the end of the taxation year. Under the current law, the SBD is reduced when taxable capital employed in Canada within the associated group exceeds $10 million and is eliminated when taxable capital reaches $15 million.

 

 

(SR&ED) Tax Incentive Program

 

This tax incentive program is a federal tax program that encourages businesses to research and develop in Canada. This program provides tax incentives for companies that invest in eligible R&D activities, such as salaries, overhead costs, and contract research expenses.

 

The Investment Tax Credit

 

The Investment Tax Credit (ITC) is a federal tax credit that helps businesses offset the cost of new capital investments, such as machinery and equipment. This tax credit is available to businesses of all sizes and can be claimed on up to $1 million of eligible capital expenditures per year.

 

The Manufacturing and Processing Profits Tax Credit

 

The Manufacturing and Processing (M&P) Profits Tax Credit is a federal tax credit that helps businesses offset the cost of manufacturing and processing products in Canada. This tax credit is available to businesses of all sizes and can be claimed on up to $10 million of eligible M&P profits per year.

 

The Export Marketing Expenses Tax Credit

 

The Export Marketing Expenses (EME) Tax Credit is a federal tax credit that helps businesses offset the cost of marketing their products and services abroad. This tax credit is available to businesses of all sizes and can be claimed on up to $5 million of eligible EME expenses per year.

 

 

Last Words

 

Small and mid-size businesses in Canada are missing out on valuable tax incentives that could help them grow their business. By taking advantage of these tax breaks, businesses can keep more money in their pockets, which can be reinvested into the company. We’ve outlined some of the most important tax incentives for small and mid-size businesses in this article, so be sure to read it to see if you’re eligible. If you have questions about taking advantage of these tax breaks or want help filing your taxes, please don’t hesitate to contact us.