New Small Business Tax Deduction
Overview
This deduction eliminates the Nova Scotia corporate income tax for the first three taxation years of an eligible new small business after incorporation.
At a glance
Funding available
- Strengthening governance
- No Condition
- Closing date : May 17, 2024
Eligible candidates
- All industries
- Nova Scotia
- For-profit business
- All revenue ranges
- 2 employees minimum
- Startups
Activities funded
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
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.
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.
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.
Submit Application
- Email the completed application and supporting documents to the New Small Business Tax Deduction Administrator.
- Note: Paper applications will not be accepted.
Await Processing
- Wait approximately 5 weeks for the processing of your application.
- Be prepared to provide additional information if requested.
Adjust Corporate Income Tax Return
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.
