Small businesses operating in Canada have the opportunity to file for tax credits that can lower payments or even earn tax rebates.
There are a number of options that you can take advantage of, depending on the kind of business you run and the expenses you pay to operate.
The Canada Revenue Agency (CRA) offers numerous options for small business owners to take advantage of. The various options can get complex and muddled in CRA lingo, but there are a number that are easy to take advantage of that will get you significant returns.
For more information on some of the small business tax credits available to you, including some past credits that you could still take advantage of, read below:
1. Hiring Credit for Small Businesses
For sole proprietors or individuals who own a small business in a partnership, there is a hiring tax credit that will send up to $1,000 back.
The cash will be automatically credited to your payroll account. It was designed to help business owners with their increased share of employment insurance premiums in 2011. Business owners have until Jan. 1, 2015 to file for this tax credit.
2. Computer Capital Cost Allowance
This is a tax credit that lets small business owners obtain as much as a 100% deduction for any computer hardware or systems software purchased.
For Class 50, the Capital Cost Allowance (CCA) rate is 55%. The half-year rule applies for year 1, so the deduction is 27.5% for the first year of acquisition.
During Canada's economic downturn, Class 52 was introduced, offering a 100% refund to encourage the purchase of computers. This deduction is available for equipment acquired after January 27, 2009, and before February 2011.
The deduction specifically applies to electronic process control or monitor equipment, electronic communications control equipment, systems software for the aforementioned equipment and data handling equipment.
However, the tax credit can't be used for computer products purchased for personal use - even if it's now used for business purposes.
3. Small Business Deduction
Some companies classified as Canadian-controlled private corporations are eligible for a small business tax deduction.
This isn't a refund, but it will cut the tax rate you'd otherwise have to pay. The small business deduction rate is 17% - a figure which is then multiplied by at least your income from business activities within Canada, your taxable income, your business limit and your reduced business limit.
These are just a few of the many tax credits available to small business owners. For more information on how you can get your tax rate reduced, or file for a tax rebate, contact a FBC tax specialist.