How Tax Credits Can Fuel Your Growth
Are you a small business owner in Canada?
If you’re not taking advantage of tax credits like SR&ED, you could be missing out on big savings. These credits are designed to help businesses with research, development, hiring, and innovation. With the right approach, tax credits can lower your tax bill or even provide a refund—money that can be reinvested to fuel your growth. Discover the tax credits available for 2024 and how they can benefit your business.
Are you a small business owner in Canada?
If you’re not taking advantage of tax credits like SR&ED, you could be missing out on big savings. These credits are designed to help businesses with research, development, hiring, and innovation. With the right approach, tax credits can lower your tax bill or even provide a refund—money that can be reinvested to fuel your growth. Discover the tax credits available for 2024 and how they can benefit your business.
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What Tax Credits Are Available for 2024?
The Canadian government offers several tax credits to support small and medium-sized businesses. These credits can help cover costs related to research and development, hiring apprentices, digital media, and more. Knowing which credits you’re eligible for can make a big difference to your bottom line.
Here’s a breakdown of the most common tax credits your business could be taking advantage of in 2024
What Are Business Tax Credits?
Business tax credits are financial incentives provided by the government to encourage activities that benefit the economy or society—such as innovation, hiring, or investing in certain technologies. Unlike deductions, which reduce taxable income, tax credits directly reduce the amount of tax you owe.
Why Do They Matter?
Tax credits are incredibly important because they can reduce your tax bill on a dollar-for-dollar basis. Some tax credits, like SR&ED, even offer refunds, making them incredibly valuable for both new and established businesses.
Are Business Tax Credits Refundable?
Yes, some business tax credits are refundable, meaning that even if your business doesn’t owe taxes, you can still receive a cash refund. Refundable credits are a great way to get some extra cash to invest back into your business.
Refundable vs. Non-refundable Tax Credits
Refundable Tax Credits
These can give you a refund even if you don’t owe taxes. Examples include certain SR&ED credits for smaller Canadian-controlled private corporations (CCPCs).
Non-Refundable Tax Credits
These reduce your tax liability, but if your credit exceeds your taxes owed, you don’t get the difference as a refund.
Types of Tax Credits for Small Businesses in Canada
Scientific Research & Experimental Development (SR&ED) Tax Credit
The SR&ED tax credit encourages businesses to conduct research and development in Canada. You don’t need to be a huge company with a formal R&D department to benefit from SR&ED. Even small businesses or startups conducting experiments, testing new products, or trying to solve technical problems may qualify.
Download Our “Understanding SR&ED Tax Credits” PDF
Who’s Eligible?
Small businesses, independent contractors, corporations, and trusts conducting R&D to advance science or technology.
How Much Can You Claim?
Canadian-controlled private corporations can claim up to 35% on the first $3 million in eligible expenses, and 15% on any additional amount.
Eligible Expenses
Wages, materials, equipment, and contractor fees related to R&D activities.
Apprenticeship Job Creation Tax Credit (AJCTC)
If your business hires apprentices, you could be eligible for the Apprenticeship Job Creation Tax Credit. This credit is designed to encourage businesses to invest in training new tradespeople.
Who’s Eligible?
Employers hiring eligible apprentices in their first two years of an apprenticeship program.
How Much Can You Claim?
You can claim 10% of eligible apprentice wages, up to a maximum of $2,000 per apprentice.
Digital Media Tax Credits
For companies involved in digital media, interactive applications, or video games, various provinces offer tax credits to encourage growth in the tech industry. For example, the Ontario Interactive Digital Media Tax Credit (OIDMTC) provides support for businesses producing digital media products.
Who’s Eligible?
Ontario-based companies developing digital media products like video games or educational software.
How Much Can You Claim?
Up to 40% of eligible expenditures on digital media products.
Canadian Film or Video Production Tax Credit (CPTC)
If you’re involved in Canadian film or television production, the Canadian Film or Video Production Tax Credit (CPTC) provides a refundable credit for certain eligible labor costs.
Who’s Eligible?
Canadian film or video production companies.
How Much Can You Claim?
Up to 25% of eligible labor costs.
Ontario Research and Development Tax Credit
For companies performing R&D in Ontario, the Ontario Research and Development Tax Credit allows you to claim an additional 3.5% of eligible R&D expenditures on top of the federal SR&ED tax credit.
Who’s Eligible?
Ontario-based corporations conducting R&D.
How Much Can You Claim?
An additional 3.5% on top of the federal SR&ED credit for qualifying expenditures.
Atlantic Investment Tax Credit
For businesses operating in Atlantic Canada, the Atlantic Investment Tax Credit encourages investment in new buildings, machinery, and equipment in certain industries like farming, fishing, and manufacturing.
Who’s Eligible?
Businesses investing in eligible property in Atlantic Canada.
How Much Can You Claim?
Up to 10% of eligible investments.
Apprenticeship Job Creation Tax Credit (AJCTC)
If your business hires apprentices, you could be eligible for the Apprenticeship Job Creation Tax Credit. This credit is designed to encourage businesses to invest in training new tradespeople.
Who’s Eligible?
Employers hiring eligible apprentices in their first two years of an apprenticeship program.
How Much Can You Claim?
You can claim 10% of eligible apprentice wages, up to a maximum of $2,000 per apprentice.
Digital Media Tax Credits
For companies involved in digital media, interactive applications, or video games, various provinces offer tax credits to encourage growth in the tech industry. For example, the Ontario Interactive Digital Media Tax Credit (OIDMTC) provides support for businesses producing digital media products.
Who’s Eligible?
Ontario-based companies developing digital media products like video games or educational software.
How Much Can You Claim?
Up to 40% of eligible expenditures on digital media products.
Canadian Film or Video Production Tax Credit (CPTC)
If you’re involved in Canadian film or television production, the Canadian Film or Video Production Tax Credit (CPTC) provides a refundable credit for certain eligible labor costs.
Who’s Eligible?
Canadian film or video production companies.
How Much Can You Claim?
Up to 25% of eligible labor costs.
Ontario Research and Development Tax Credit
For companies performing R&D in Ontario, the Ontario Research and Development Tax Credit allows you to claim an additional 3.5% of eligible R&D expenditures on top of the federal SR&ED tax credit.
Who’s Eligible?
Ontario-based corporations conducting R&D.
How Much Can You Claim?
An additional 3.5% on top of the federal SR&ED credit for qualifying expenditures.
Atlantic Investment Tax Credit
For businesses operating in Atlantic Canada, the Atlantic Investment Tax Credit encourages investment in new buildings, machinery, and equipment in certain industries like farming, fishing, and manufacturing.
Who’s Eligible?
Businesses investing in eligible property in Atlantic Canada.
How Much Can You Claim?
Up to 10% of eligible investments.
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Maximize Your Savings: Tax Credits to Drive Business Growth
Tax credits offer a huge opportunity for small businesses to save on taxes and access additional funding. Whether you’re engaging in research and development, hiring apprentices, or investing in new technologies, there’s likely a credit out there that could help your business grow. Start by looking into SR&ED and other applicable credits, and don’t hesitate to consult a professional for guidance.
How to Claim Tax Credits
Claiming tax credits may seem complex, but it’s well worth the effort for the potential savings. For SR&ED, you’ll need to file Form T661 along with your income tax return, outlining your eligible expenditures. Each credit has its own specific form and requirements, so it’s a good idea to consult with a tax professional or an expert in government funding like Fundspoke.
FAQs About Tax Credits
What is the SR&ED Tax Credit?
The SR&ED (Scientific Research & Experimental Development) Tax Credit is a federal program that offers Canadian businesses a refundable tax credit of 15-35% on qualifying R&D expenditures. It’s designed to encourage innovation and technological advancement across all industries.
Who qualifies for the SR&ED tax credit?
Any Canadian business performing research and development activities that aim to make advancements in science or technology may qualify. This includes small businesses and independent contractors.
How long does it take to get SR&ED credits?
SR&ED claims are typically processed within 60 days, but claims may take up to 120-180 days if selected for further review.
What are the key benefits of tax credits for small businesses?
Tax credits reduce your tax liability directly and can even result in a cash refund if they are refundable credits. They offer immediate savings, allowing small businesses to reinvest money back into growth.
What types of tax credits are available through Fundspoke?
Fundspoke offers expertise in identifying and managing funding opportunities, including grants and tax credits like SR&ED, digital media tax credits, and apprenticeship job creation credits. Fundspoke focuses on helping businesses streamline the application process and secure the most suitable credits.
Is it worth using a service like Fundspoke?
Yes! Fundspoke can help you navigate the complicated landscape of tax credits and funding opportunities, ensuring you don’t miss out on any valuable savings.