It is no longer a hidden fact that payment of taxes is not something most business owners look forward to. The reason is that most of them have to pay from unavailable or depleted funds.
The majority of SR&ED tax credits from provincial (and federal government) allow you to exclude the cost of your outlay from your taxable income. How does this work? This article discusses tax benefits available to business owners.
Research and development credits
This type of credit is open to all who are interested in R&D of useful projects that can foster innovation and the development of new products.
They are especially available to companies in fields such as :
- Information technology ;
- Architecture ;
- Construction.
The credits that come from these research processes can be applied or used in clearing off payable taxes. Also, the establishment of this tax credit was created to encourage businesses and sectors to improve technologically.
Energy credits
Companies concerned with the use, conservation, and efficiency of energy output and its sustenance are on the top radar for this type of tax credit.
The energy tax credit works to reduce the amount of payable tax of the company. This encourages the usage of alternative energy sources.
Work opportunity tax
The employment opportunity tax is designed to help those with criminal histories, veterans, unemployed people, and people with physical or mental disabilities.
These people have records that make them either unsuitable or ineligible for employment in certain organizations or companies.
To be eligible for this tax credit, you must have hired at least one employee from one of the listed groups.
Small business tax credits
Some small firms provide their employee’s retirement plans, which can be expensive for employers.
This credit helps to lower the cost associated with creating the retirement plan.
For a small business to be eligible for this, it had to have met the following criteria :
- Full-time employees are less than a quarter of a hundred i.e 25 ;
- Average employee earns above $50,000 per year ;
- Cover more than half of your permanent staff health cost.
Family and medical paid leave credit
This tax credit type was enacted by the Tax Cuts and Jobs Act of 2017. It was to encourage companies to grant their workers paid leave when a mother experiences health complications during childbirth.
One criterion to qualify for this credit is that employers pay their employees on medical leave up to 50% of their salaries.
Disabled access credits
Companies or organizations that have taken steps to make their facilities or workspace accessible to those with disabilities are eligible for this tax credit.
Making a building accessible for those with impairments typically involves significant financial outflows. As a result of this, the government made provisions of these laws to encourage and ease the cost of inclusion of these persons with disabilities.
How much your business can claim also boils down to the type of business you run, your record-keeping abilities, and your proactiveness in exploring the different tax credit options.
