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New Small Business Tax Deduction - NS - Canada

New Small Business Tax Deduction

Last Update: July 22, 2025
NS, Canada
Tax credit for newly incorporated Nova Scotia businesses

At a glance

Eligible Funding
  • No Condition
Timeline
  • Closing date : May 17, 2024
Financing Type
Tax Credits
Eligible Industries
  • All industries
Program status
Closed

Overview

This deduction eliminates the Nova Scotia corporate income tax for the first three taxation years of an eligible new small business after incorporation.

Activities funded

Examples of admissible projects:
$ 15,000
Launching a community arts program for underprivileged youth
$ 35,000
Setting up a mobile farmers market to serve rural communities around Sydney
$ 50,000
Developing an app to connect freelance creatives with businesses
$ 40,000
Creating a coworking space for social enterprises
$ 30,000
Launching an eco-friendly clothing line using sustainable materials

Eligibility

A business must meet the following criteria to be eligible for the New Small Business Tax Deduction:

  • The business must qualify for the federal small business deduction for the applicable tax year.
  • The business must have maintained a permanent establishment in Nova Scotia at any time during the tax year.
  • The business must be a new Nova Scotia business.
  • The business must have at least 2 employees, with at least 1 employee unrelated to any shareholder of the corporation.
  • The business must not be in a partnership or joint venture with an ineligible corporation.
  • The business must not be a beneficiary of a trust where any beneficiary is ineligible.
  • The business must not be a previous active business with essentially the same owners or related owners.
  • The business must not be a professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian, or chiropractor.
  • The business must not carry on the same, or substantially the same, business activity it carried on as a sole proprietorship, partnership, or corporation.

Who is eligible?

Eligible applicants must be new small businesses in Nova Scotia that qualify for the federal small business deduction, maintain a permanent establishment in the province, and are not involved in specified professional practices, partnerships, or previously active businesses with the same ownership.

Who is not eligible

This grant excludes certain companies and industries based on their status and main activities. The outlined restrictions help ensure that the tax deduction is provided to strategic small business sectors in Nova Scotia.

  • Businesses that are a professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian, or chiropractor.
  • Corporations involved in partnerships or joint ventures with ineligible entities.
  • Businesses that are beneficiaries of a trust where any beneficiary is ineligible.
  • Companies that are essentially the same as previous active businesses with the same or related owners.
  • Businesses carrying on the same, or substantially the same, business activity as a previous sole proprietorship, partnership, or corporation.

Eligible expenses

There are no specific projects or activities mentioned as eligible for this grant within the provided context. The grant focuses on eliminating provincial corporate income tax for certain qualifying new small businesses in Nova Scotia.


Eligible geographic areas

This tax deduction is specifically available for businesses that are located in Nova Scotia, as dictated by the requirement of maintaining a permanent establishment in the province. The deduction aligns with localized economic strategies to support new business growth within the region.

  • Companies located in Nova Scotia.

Selection criteria

The evaluation and selection of projects for this grant do not have specified criteria or point scores outlined in the provided context.

How to apply

1

File Corporate Income Tax Return

  • File your corporate income tax return with the Canada Revenue Agency (CRA).
  • Ensure that Schedule 341 is included with your filing.
2

Prepare Application Form

  • Download the New Small Business Application form (pdf) from the official website.
  • Complete the form with all necessary details including CRA Business Number, incorporation date, and shareholder information.
  • Gather supporting documents: corporate income tax return for the relevant taxation year, including Schedule 341.
  • Ensure that you have the signature of an authorized signing officer.
3

Calculate Employment and Payroll Data

  • Compile total hours worked in the tax year by each employee unrelated to any shareholders.
  • Calculate the percent of total wages and salaries paid to employees who are Nova Scotia residents.
4

Submit Application

  • Email the completed application and supporting documents to the New Small Business Tax Deduction Administrator.
  • Note: Paper applications will not be accepted.
5

Await Processing

  • Wait approximately 5 weeks for the processing of your application.
  • Be prepared to provide additional information if requested.
6

Adjust Corporate Income Tax Return

Upon receiving your Eligibility Certificate, adjust your corporate income tax return to claim the New Small Business Tax Deduction.

Additional information

This grant provides a corporate tax holiday for the first three years for eligible new small businesses, under specific conditions.

  • You can apply for the grant at the end of each of your corporation's first 3 tax years or up to 3 years after your corporation's year end for the specified tax years.
  • Applications will be processed sequentially, meaning you can't apply for the 2nd or 3rd year without submitting the previous years' applications.
  • It takes about 5 weeks to process your application, but it can take longer if more information is needed or if forms are filled in incorrectly.
  • Key documents needed include CRA Business Number, incorporation date, list of shareholders with their share percentages, and corporate income tax return including Schedule 341.
  • The grant application must be submitted via email; paper applications are not accepted.

Contacts

Samantha.Thomson@novascotia.ca
902-424-5388
NS, Canada
Apply to this program

Frequently Asked Questions about the New Small Business Tax Deduction Program

Here are answers to the most common questions about the New Small Business Tax Deduction. This section explains what the program is, how much funding is available, eligibility requirements, application deadlines, and other important details to help you determine if this grant is right for your business.

What is the New Small Business Tax Deduction?

How much funding can be received?

What expenses are eligible under New Small Business Tax Deduction?

What is the deadline to apply?

Is the New Small Business Tax Deduction a grant, loan, or tax credit?

Who are the financial supporters of the New Small Business Tax Deduction?

Who is eligible for the New Small Business Tax Deduction program?

Who can I contact for more information about the New Small Business Tax Deduction?

Where is the New Small Business Tax Deduction available?

Are startups eligible for the New Small Business Tax Deduction program?

Apply to this program

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