Small Business Tax Credits
Hidden tax opportunities for Canadian small businesses — credits, deductions, and incentives you may be missing.
Canadian small businesses often overlook valuable tax credits that could reduce their tax bill by thousands. Here are the most commonly missed credits and how to claim them.
The Small Business Deduction (SBD)
The SBD reduces federal corporate tax on the first $500,000 of active business income from 15% to 9%. Provincial rates drop similarly (e.g., BC from 12% to 2%).
The SBD is phased out for corporations with taxable capital employed in Canada between $10M and $50M. Review your associated corporations — the $500,000 limit is shared.
Scientific Research & Experimental Development (SR&ED)
- Refundable 35% federal credit on qualifying R&D expenditures for CCPCs (up to $3M).
- Non-refundable 15% credit on amounts above the cap or for non-CCPCs.
- Provincial top-ups can bring total recovery to 50–70% of qualifying costs.
Apprenticeship Job Creation Tax Credit
Employers in eligible Red Seal trades can claim a non-refundable credit of 10% of salary paid to apprentices (max $2,000 per apprentice per year).
Investment Tax Credits
- Atlantic Investment Tax Credit — 10% on qualifying property.
- Regional ITCs for specific industries.
- Clean technology and zero-emission vehicle ITCs (new for 2024+).
Digital Tax Credits
The Canada Digital Adoption Program offered grants and 0% loans for technology upgrades. While certain streams have ended, provincial equivalents continue.
We review every client's return for missed credits — contact us for a complimentary credit assessment before your next filing.
Key Takeaways
- 1The SBD is the single most important credit — ensure associated corporations aren't grinding yours.
- 2SR&ED applies to far more businesses than most realize — software dev, process improvements, etc.
- 3Apprenticeship, regional, and clean tech credits add up quickly for eligible businesses.
Need help applying this to your situation?
Our CPA-led team can review your specifics and implement these strategies for you.
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