Tax Tip - Businesses: The CRA offers a variety of federal tax credits that can help your business save money

OTTAWA, ON , Dec. 4, 2024 /CNW/ - The Canada Revenue Agency provides a range of federal tax credits aimed at helping your business save money. By claiming these tax credits, you can lower your taxable income or lower the amount of tax you owe. To help you find which credits you may be eligible for, we've put together this handy resource.

Federal tax credits for businesses

• Canada Carbon Rebate for Small Businesses: This rebate is a refundable tax credit that helps balance the expenses that come with carbon pricing by automatically returning a portion of the federal fuel charge proceeds to eligible Canadian-controlled private corporations (CCPC). Payments for the rebate have started to be issued. Most eligible CCPCs should receive their payment by the end of the calendar year.
• Canadian journalism labour tax credit: The Canadian journalism labour tax credit offers financial support to qualifying journalism organizations. This is a 35% refundable tax credit on qualifying labour expenditures paid to eligible newsroom employees, up to a salary cap of $85,000 per eligible newsroom employee. The rate increased to 35% for the period from January 1, 2023, to December 21, 2026. After that period, the rate will return to 25%. To qualify for this credit, an organization must first be designated as a qualified Canadian journalism organization (QCJO). Once designated, it must meet additional criteria to be recognized as a qualifying journalism organization, which is required to claim the tax credit. To find out if your organization may qualify for a QCJO designation, try using our online self-screening tool.
• Federal foreign business income tax credit: This tax credit helps reduce your Canadian taxes by providing relief from double taxation resulting from taxes paid to foreign governments on business income earned outside Canada. To claim this credit, you must provide details of the foreign taxes paid and meet specific eligibility requirements.
• Federal logging tax credit: This tax credit provides support for individuals and businesses that have paid logging tax to a province for logging activities. It helps reduce federal income taxes payable by eligible businesses.
• Federal qualifying environmental trust tax credit: This refundable tax credit is available to people or organizations who receive income from a qualifying environmental trust.

• Federal film tax credits: The following two federal film tax credits support Canada's creative industries:
  • The Canadian film or video production tax credit (CPTC) encourages the creation of Canadian film and television programming and the development of an active domestic independent production sector in Canada. This refundable tax credit is available at a rate of 25% of the qualified labour expenditure in respect of an eligible production.
    
    
  • The film or video production services tax credit (PSTC) promotes Canada as a location of choice for foreign and Canadian-owned film and television productions employing Canadians. This refundable tax credit is worth 16% of the qualified Canadian labour expenditure for an accredited production.

In order for a production to be eligible for either the CPTC or the PSTC, a corporation must first apply for certification with the Canadian Audio-Visual Certification Office.  

Note: You can only claim one of the two federal tax credits for a production.

• Investment tax credit (ITC): This tax credit applies to specific investments including investments in, scientific research and experimental development, eligible apprenticeships, and more. The ITC can be claimed for certain qualified property and certain expenditures, that varies depending on the type of investment for which the credit is being claimed. The ITC applies to:
  
  
  • Scientific research and experimental development (SR&ED) tax incentives: Support businesses performing research and development work in Canada. Eligible businesses may be able to claim the following two SR&ED tax incentives: 
    • a current deduction to reduce their taxable income
    • an investment tax credit for qualified expenditures that can be:
      • Non-refundable (rate of 15%)
      • Refundable (rate of 35%) for certain CCPCs
    •  Eligible activities include:
      • Basic research
      • Applied research
      • Experimental development
      • Eligible support work that directly supports the basic research, applied research and experimental development that is of a specific type, such as engineering, design, or operations research.
  • Atlantic investment tax credit: This credit is based on specified percentages available for certain investments in new buildings, and new machinery and equipment used in the Atlantic Canada and Atlantic Region. 
    • Eligible investments for the Atlantic investment tax credit include:
      • farming
      • fishing
      • logging
      • manufacturing and processing
      • storing grain
      • harvesting peat
      • prescribed new energy generation and conservation property
      • the production or processing of electrical energy or steam in certain areas
  • Apprenticeship job creation tax credit: The Apprenticeship Job Creation Tax Credit is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices employed in prescribed trades. The maximum credit is $2,000 per eligible apprentice per year, and businesses that hire eligible apprentices can claim this credit. A prescribed trade includes the trades currently listed as Red Seal Trades.

• Clean economy investment tax credits: As a business, you may be eligible for refundable tax credits for investments in Canada that support the transition to net zero emissions. These investment tax credits include:
  
  
  • • Clean Hydrogen
    • Clean Technology
    • Clean Technology Manufacturing
    • Carbon Capture, Utilization, and Storage
• Manufacturing and processing profits deduction: This deduction provides tax relief to corporations that earn at least 10% of their revenue from manufacturing or processing goods in Canada. A rate of 13% is applied to taxable income that represents Canadian manufacturing and processing profits, and that is not eligible for the small business deduction.
• Return of fuel charge proceeds to farmers tax credit: This tax credit is a way to return fuel charge proceeds to farming businesses. To qualify, a farming business must have gross eligible farming expenses of $25,000 or more. All or a portion of these expenses must be attributable to a specific province that is a designated province. The credit is calculated based on eligible farming expenses attributable to a designated province for the tax year, multiplied by the applicable payment rate.

• Zero-emission technology manufacturing deduction: This deduction offers tax relief for corporations involved in producing zero-emission technologies. From 2022 to 2031, qualifying manufacturers benefit from a reduced tax rate of 7.5% instead of the standard 15% and 4.5% instead of the small business rate of 9%. These reduced rates will be gradually phased out for tax years that begin in 2032, and will be fully phased out after 2034.

Federal tax credits are an effective way to manage your tax obligations while supporting your financial goals. Staying up-to-date with eligible credits makes sure your business benefits fully from available tax relief.

Contacts 

Media Relations
Canada Revenue Agency
613-948-8366
[email protected]

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SOURCE Canada Revenue Agency