New Small Business Tax Deduction
Highlights
This program is a fantastic opportunity for your business. It eliminates provincial corporate income tax for the first three years after incorporation. This means more money stays in your business, allowing you to reinvest in growth and development.
Key Benefits:
- No provincial corporate income tax for the first three years.
- Increased cash flow to reinvest in your business.
- Simple application process with support available.
By applying, you can significantly reduce your tax burden, making it easier to manage your finances and plan for the future. The program is designed to support new businesses like yours, making it easier to qualify and benefit from these savings.
Financing Details
Type of Financing: Tax Credit
Repayment Terms and Interest Rates:
- There are no repayment terms or interest rates as this is a tax credit.
Eligible Expenses:
- Provincial corporate income tax for the first 3 taxation years after incorporation.
Use of Funds:
- The funds cannot be directly used for any expenses. Instead, the tax credit reduces the amount of provincial corporate income tax your business owes.
Fees:
- There are no fees associated with this tax credit program.
Qualifications
- Must qualify for the federal small business deduction for the applicable tax year.
- Must maintain a permanent establishment in Nova Scotia at any time during the applicable tax year.
- Must have at least 2 employees, with at least 1 employee unrelated to any shareholder of the corporation.
Disqualifications:
- Businesses in a partnership or joint venture with an ineligible corporation.
- Businesses that are beneficiaries of a trust where any beneficiary is ineligible.
- Previous active businesses with essentially the same owners or related owners.
- Professional practices of accountants, dentists, lawyers, medical doctors, veterinarians, or chiropractors.
- Businesses carrying on the same, or substantially the same, business activity that they carried on as a sole proprietorship, partnership, or corporation.
Description
This program eliminates provincial corporate income tax for your new small business for the first 3 years after incorporation. This means you won't have to pay provincial corporate income tax during this period, which can save your business a significant amount of money.
Benefits to your business:
- Save on taxes: No provincial corporate income tax for the first 3 years.
- More funds for growth: Use the money saved from taxes to reinvest in your business.
- Boost your cash flow: Extra funds can help with daily operations, hiring more staff, or expanding your services.
To qualify, your business must be new and meet certain criteria. This program is a great opportunity to reduce your tax burden and invest more in your business's future.
Program Steps
File Corporate Income Tax Return:
- File your corporate income tax return with the Canada Revenue Agency (CRA).
- Include Schedule 341 with your return.
Complete the Application Form:
- Download and fill out the application form. You can apply annually for up to 3 years.
Prepare Documentation:
- CRA Business Number
- Incorporation date
- List of shareholders and their individual percent of shares
- Total hours worked in the tax year by each employee unrelated to any shareholders
- Percent of total wages and salaries paid by the corporation in the tax year to employees who are Nova Scotia residents
- Signature of authorized signing officer
- Corporate income tax return for the relevant taxation year (including Schedule 341)
Submit Application and Documents:
- Send your completed application form and supporting documents by email to the New Small Business Tax Deduction Administrator.
- Note: Paper applications will not be accepted.
Receive Eligibility Certificate:
- Wait for about 5 weeks for your application to be processed.
- Processing time may be longer if more information is needed or if the form is not filled out correctly.
Adjust Corporate Income Tax Return:
- After receiving your Eligibility Certificate, adjust your corporate income tax return to claim the New Small Business Tax Deduction.
