Essential Tax Credits and Grants Every Small-Business Owner Should Know

Mark Virgil Lofranco • 21 September 2024

Did you know that public funding can be a key resource for getting your business off the ground? Beyond startup loans, public funding includes various tax credits and grants designed to help businesses grow and succeed. This article will guide you through the types of public funding available to Canadian entrepreneurs, including federal and provincial tax credits, grants, and other opportunities to help your business thrive.

Tax Breaks for Small Businesses

Tax credits are incentives that help businesses reduce their taxable income, with some even generating refunds to increase cash flow. Common small business tax credits include:

Scientific Research and Experimental Development (SR&ED) Tax Credit

Apprenticeship Job Creation Tax Credit (AJCTC)

Canadian Film and Video Production Tax Credit (CPTC)

Green Energy Tax Credit

Agriculture Tax Credit

SR&ED Tax Credit

The SR&ED tax credit encourages scientific and technological development. Available to individuals, small businesses, corporations, and trusts, it offers support for research and development efforts across all industries.

Apprenticeship Job Creation Tax Credit (AJCTC)

This credit allows businesses to receive up to $2,000 for each eligible apprentice employed, encouraging job creation and skill development in trades.

Province- or Territory-Specific Tax Credits

In addition to federal tax credits, there are many local tax incentives. Examples include:

Canadian Film or Video Production Tax Credit (CPTC): Available in Manitoba, Ontario, and Quebec, offering refundable credits up to 45% on labor expenses.

Manitoba Green Energy Equipment Tax Credit: Credits of 7.5% to 15% for installing heat-pump or solar thermal systems.

Agriculture Tax Credits: Available in BC, Prince Edward Island, and New Brunswick to support farmers and agribusinesses.

Other regional tax credits include:

Small Business Venture Capital Tax Credit

Tax Credits for Book Publishers

Digital Media Production Tax Credits

You can browse through the CRA site for a full list of over 80 province- and territory-specific tax credits.

Canadian Small-Business Grants

Grants provide non-repayable funding for businesses, which can be a major boost. Unlike tax credits, however, grants must be reported as income and don’t reduce taxable income directly. Grants can be awarded for various business activities, including:

Search and Rescue Operations

E-commerce Adoption

Organic Farming

Women in Trades

Book Publishing

Mining Operations

Industry-Specific Government Grants

Here are a few examples of grants by industry:

Manufacturing: For businesses developing new innovative products.

Oceanic Industries: Grants for fisheries, aquaculture, and shipbuilding support.

Technology Adoption: Funds for businesses adopting new technologies.

Farming: Grants to help farms convert to organic practices.

Grants for Women Entrepreneurs

Several programs encourage diversity by providing grants specifically for women-owned businesses. For instance, the Native Women’s Association of Canada (NWAC) offers $10,000 for training women in trades. Meanwhile, Manitoba offers up to $50,000 for women-owned businesses to start or expand.

Startup Business Grants

There are numerous grants available to support new ventures. Whether you’re starting a Canadian book publishing business (up to $50,000) or launching a mineral-prospecting business ($12,000), there’s likely a grant to fit your business needs.

The Canadian government website lists comprehensive information on available grants for small businesses, helping you explore all your funding options.

Key Takeaways:

The Canadian government offers various financing options for small businesses, including startup loans, tax credits, and grants.

Grants are funds that do not need to be repaid, unlike loans.

Tax credits reduce your taxable income and, in some cases, can generate a tax refund.

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