The Canada Revenue Agency offers a range of credits to help out small business owners. While most credits offset your business's tax liability, others inject cash into your payroll account.
Investment Tax Credit
If you invested in qualifying property or expenditures during the tax year, a portion of those expenses can be claimed as an investment tax credit. Unused investment tax credits from previous years can be claimed on your current year's taxes.
Apprenticeship Job Creation Tax Credit
If you hire an apprentice, you can claim 10 percent of his wages, up to $2,000, as a tax credit. To be eligible for the apprenticeship job creation tax credit, you must register the apprenticeship with your provincial or territorial government or a federal apprenticeship program. The apprentice must work for you in a qualifying trade, and the apprenticeship must be the apprentice's first two years in his field.
You may carry AJCTCs back three years or forward 20 years. For example, if you have paid a qualifying apprentice $20,000, you can claim a $2,000 AJCTC.
However, if your current year's tax bill is not large enough to need the offset, you may claim this credit on an old tax return from up to three years ago, or you may save it for a future year when you have a larger tax bill. If you save your ACTCs, you must use them within 20 years of the time you paid the apprentice's wages.
Investment Tax Credit for Child Care Spaces
If you provide child care services for your employees' children, you may claim a portion of those expenses as a non-refundable tax credit. The child care facility must be licensed, and your credit equals the lesser amount of $10,000 per child care space you create or 25 percent of eligible expenses.
If you spent $30,000 or $40,000 last year creating a day care for your employee's children, you may claim a $7,500 or $10,000 credit, respectively. However, if you spent more than $40,000, you only earn the maximum credit of $10,000.
If your business is a child care centre, you may not claim this credit. It is reserved for businesses who offer child care services to their employees as a perk.
Hiring Credit for Small Businesses
If you have a payroll account with the CRA, you may be able to earn funds for that account through the CRA's hiring credit for small businesses. To earn the credit, you must pay more into your Employment Insurance account during the current year than you did during the previous year. When the CRA notices the increase in EI payments, the agency credits your payroll program account with up to $1,000.
Input Tax Credits
If your business has a goods and services tax/harmonized sales tax account, you may recover GST/HST you paid on items for your business. For example, if you own a restaurant, and you buy some supplies for it, you may claim the entire amount of GST paid on those items.