Investment Tax Credit

A tax credit for each new child care space employers create for their employees.

Employment and Social Development Canada

Overview of the Investment Tax Credit program:

The Investment Tax Credit (ITC) is a program administered by the Canada Revenue Agency (CRA) that allows businesses and individuals to claim a tax credit for certain qualified expenditures, primarily aimed at encouraging investment in specific sectors such as research and development, renewable energy, and other eligible activities. This credit can significantly reduce the amount of tax owed, making it a valuable incentive for businesses to invest in innovation and sustainability.

Benefits of the Investment Tax Credit program:

Tax Savings: The ITC directly reduces the amount of income tax payable, offering substantial savings on taxes for eligible expenditures.
Encouragement of Investment: By reducing the after-tax cost of investments, the ITC incentivizes businesses to invest in research, development, renewable energy, and other eligible activities that can lead to innovation and growth.
Cash Flow Benefits: In some cases, if the ITC exceeds the amount of tax owed, it can be carried forward to future tax years or, in certain circumstances, be refunded, improving cash flow.
Support for Sustainable Practices: The ITC supports investments in renewable energy and conservation, encouraging businesses to adopt more sustainable practices.
Boost to R&D: The credit provides a significant boost to research and development activities, helping businesses to innovate and stay competitive in their industries.

Eligibility criteria of the Investment Tax Credit program:

Eligible Expenditures: The ITC can be claimed for certain qualified expenditures, including those related to:
Scientific Research and Experimental Development (SR&ED): Costs related to research and development activities.
Renewable Energy: Investments in renewable energy projects, such as solar, wind, and geothermal energy.
Conservation: Expenditures aimed at energy conservation and efficiency.
Other Qualifying Investments: Various other investments that meet the criteria set out by the CRA.
Taxpayer Status: Both individuals and corporations that incur eligible expenditures can apply for the ITC. Partnerships and trusts may also be eligible under specific conditions.
Canadian Residency: The applicant must be a Canadian taxpayer, either an individual or a corporation, and the investments must be made in Canada.
Compliance: The applicant must comply with all CRA regulations and provide the necessary documentation to substantiate the claim.