Small Business Tax Credit
At a glance
- No Condition
- Open Date : January 1, 2023
- Closing date : April 30, 2023
- All industries
Overview
The general corporate tax rate is 15% but small businesses can pay only a 3% tax rate on the first $500,000 of active business income.
Activities funded
Eligibility
Eligibility for the Small Business Tax Credit in Newfoundland and Labrador is determined by specific criteria related to the business operations and income.
- The business must be operating within the province of Newfoundland and Labrador.
- The business must qualify as a small business under the provincial definitions.
- The business's active business income must be $500,000 or less to benefit from the reduced tax rate.
Who is eligible?
Tourism operators in Prince Edward Island who operate a business with a valid tourism establishment license, except for bed and breakfast establishments as defined in the Tourism Industry Act Regulations, can apply for this financing assistance. Eligible projects include business purchases, expansions, new constructions, or repairs and updates of fixed assets, specifically aimed at improving tourism facilities in the region.
Who is not eligible
Some restrictions are placed on which tourism operators can apply for this financing program, primarily focusing on the type of establishments and certain operational conditions.
- Bed and breakfast operations, as defined by the Tourism Industry Act Regulations, are not eligible.
- Accommodation operations with fewer than three lodging units upon project completion do not qualify for capital financing.
- Vehicles that do not directly contribute to the business's income or sales are excluded from eligibility.
Eligible expenses
This grant program targets Prince Edward Island tourism operators seeking financial support for various business-related activities. It is focused on projects that enhance tourism facilities while encouraging extended tourist seasons.
- Purchase of tourism-related businesses.
- Expansion of existing tourism operations.
- New construction of tourism facilities.
- Repair or updating of fixed assets related to tourism.
- Acquisition of machinery and equipment for tourism use.
- Purchase of real property and buildings for tourism purposes.
- Projects that contribute to lengthening the tourist season, such as converting accommodation units for other uses in the off-season.
Eligible geographic areas
This tax credit is specifically available for small businesses situated in a designated region to support local economic growth. The eligible geographical area is defined to ensure the benefit reaches the intended recipients.
- Small businesses located in Newfoundland and Labrador, Canada.
Selection criteria
Yes, evaluation and selection criteria exist for this grant. Applicants will be assessed based on their project's alignment with the grant objectives and the potential economic impact.
- Alignment with grant objectives
- Potential economic impact
How to apply
Determine Eligibility
- Review the eligibility criteria to ensure your business qualifies as a small business in Newfoundland and Labrador.
- Ensure your active business income does not exceed the $500,000 threshold.
Gather Required Information
- Collect financial statements that demonstrate your active business income.
- Ensure your corporate records are up to date and reflect compliance with Newfoundland and Labrador business regulations.
Calculate Eligible Tax Reduction
- Determine the amount of tax reduction you are eligible for based on your income.
- Consult a tax professional if necessary to accurately calculate your savings.
Complete Tax Return
- Complete your corporate tax return using the reduced 3% tax rate on eligible income.
- Ensure all sections are accurately filled out and applicable schedules are attached.
Submit Tax Return
- Submit your completed tax return to the Canada Revenue Agency (CRA) with all relevant documentation.
- Ensure submission is done by the deadline to avoid penalties.
Additional information
Here are additional relevant details for this tax credit:
- Businesses must be incorporated in Newfoundland and Labrador to qualify for the small business tax rate.
- The 3% tax rate applies to active business income only, which does not include passive income or income from non-active sources.
- Companies may need to have their financial accounts audited annually to verify active business income levels.
- This tax credit may affect eligibility for other national tax credits available to Canadian businesses.
- The threshold of $500,000 is subject to change based on provincial budget adjustments and economic policy reviews.