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Investment Tax Credits



Investment Tax Credits are an attempt by the Canadian government (at both the federal and provincial levels) to encourage businesses to invest in the economy and be good citizens.

For instance, businesses can earn federal Investment Tax Credits for SR&ED (research and development), creating child-care spaces and hiring apprentices. They can also earn Investment Tax Credits for investing in new buildings, machinery and equipment that are used for what the Canada Revenue Agency calls designated activities. Provincial Investment Tax Credits are listed in both the T1 (Individual) and T2 (Corporate) Income Tax Guides.

Investment Tax Credits are based on a percentage of the investment cost.

Before you apply the specified percentage for the particular Investment Tax Credit you are claiming, however, you need "to reduce the capital cost of the property or expenditure by any government or non-government assistance you received or will receive for that property or the expenditure" (Canada Revenue Agency).

Investment Tax Credits can be claimed by both individuals and corporations in Canada.

For more details on claiming federal Investment Tax Credits and the federal Investment Tax Credits that are available, see Investment Tax Credits for Canadian Small Businesses.

Investment Tax Credits do not need to be fully used or even used at all in the tax year that they are earned. Any unused portion of tax credit can be carried back three years or carried forward 20 years, so you can choose when to use it for your best tax advantage.

Common Misspellings: Invesment Tax Credits, Investmint Tax Credits, Investment Tax Credets.
In Manitoba, you can earn a 10% Manufacturing Investment Tax Credit on qualified property acquired before January 1st, 2012, to reduce Manitoba tax payable.

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