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Source verified July 9, 2026
Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction
Reduced tax on manufacturing profits
Latest source updateLast Update: July 6, 2026Latest change: The CRA tax guide page for line 616 now shows updated manufacturing and zero-emission technology deduction details, along with revised labour-requirement and recapture instructions.View change
Latest source update
Last Update: July 6, 2026
Latest change: The CRA tax guide page for line 616 now shows updated manufacturing and zero-emission technology deduction details, along with revised labour-requirement and recapture instructions.
Tax guide updates for MPPD and ZETM deduction
The CRA tax guide page for Line 616 now shows the manufacturing and processing profits deduction and zero-emission technology manufacturing deduction details, including the statement that the temporary reduced tax rates are phased out from 2032 and end after 2034, with rates of 4.5% and 7.5% for 2022 to 2031, 5.625% and 9.375% for 2032, 6.75% and 11.25% for 2033, 7.875% and 13.125% for 2034, and 9% and 15% for 2035 and later. The same guide also now shows updated labour-requirement penalty wording, including the $20 per day prevailing-wage amount for 2023, the $50 apprenticeship amount for 2023, and the revised Schedule 31 recapture instructions for clean economy ITCs and SR&ED.
Funding available
Varies by project
Deadline
Open continuously
Location
Canada
Who can apply
Corporations that derive at least 10% of their gross revenue for the year from manufacturing or processing goods in Canada for sale or lease
See full eligibility
Overview
Schedule 27 lets corporations deriving at least 10% of gross revenue from manufacturing or processing goods in Canada for sale or lease claim the Canadian manufacturing and processing profits deduction, reducing Part I tax. It covers manufacturing, electrical energy, steam, and zero-emission technology manufacturing activities.
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Opportunity Score
Moderate potential, but conditions must align.
At a glance
Funding available
Financing goals
- Optimize production processes
- Reduce environmental footprint
Eligible Funding
- Varies by project
Funds Providers
Eligible candidates
Eligible Industries
- All industries
Location
- Canada
Legal structures
- For-profit business
Annual revenue
- $ 200,000 maximum revenue
Organisation size
- All organization sizes
Audience
- Canadians
Next Steps
1
Determine your project
2
Validate your eligibility
Activities funded
- Manufacturing or processing in Canada of goods for sale or lease
- Generating electrical energy for sale
- Producing steam for sale
- Zero-emission technology manufacturing
Documents Needed
- Schedule 27, Calculation of Canadian Manufacturing and Processing Profits Deduction
- A separate sheet of paper attached to the form, if applicable, with partnership or associated corporation information
Official resources
Eligibility
Who is eligible?
- Corporations that derive at least 10% of their gross revenue for the year from manufacturing or processing goods in Canada for sale or lease
- Small manufacturing corporations that meet requirements 1 through 4 in Part 1 of Schedule 27
How to apply
- Download and save the PDF to your computer.
- Open the downloaded PDF in Acrobat Reader 10 or later.
Processing and Agreement
- To allocate the $100 million taxable income exemption and calculate the additional tax on banks and life insurers, complete Schedule 68 and file it with your return.
Additional information
- The page now states that the schedule can be used to claim either the Canadian manufacturing and processing profits deduction or the zero-emission technology manufacturing deduction.
- Corporations claiming the manufacturing and processing profits deduction must begin with parts 1, 2, or 10, as applicable.
- Schedule 27 is available as an accessible fillable PDF, a standard print PDF, and in previous-year versions.
Frequently Asked Questions about the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction Program
What is the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction?
Schedule 27 lets corporations deriving at least 10% of gross revenue from manufacturing or processing goods in Canada for sale or lease claim the Canadian manufacturing and processing profits deduction, reducing Part I tax. It covers manufacturing, electrical energy, steam, and zero-emission technology manufacturing activities.
Who is eligible for the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction program?
To be eligible for the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction program, you must:
The corporation must derive at least 10% of its gross revenue for the year from manufacturing or processing goods in Canada for sale or lease.
To qualify as a small manufacturer, it must meet requirements 1 through 4 in Part 1 of Schedule 27.
It must not carry on any active business outside Canada at any time during the year.
What expenses are eligible under Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction?
Manufacturing or processing in Canada of goods for sale or lease
Generating electrical energy for sale
Producing steam for sale
Zero-emission technology manufacturing
Where is the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction available?
The Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction program is available across Canada.
Is the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction a grant, loan, or tax credit?
Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction is a Tax Credits
Who are the financial supporters of the Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction?
Manufacturing and processing profits deduction and zero-emission technology manufacturing deduction is funded by Government of Canada