5 Tax Incentives For Small Business Owners In Canada

Owning a small business in Canada has quite a few perks. One of the biggest is the fact that the Canadian government offers tax incentives for small business that surpass other countries. When you write off the applicable business expenses under the CRA’s Statement of Business or Professional Activities, you may decrease your taxes payable and receive a substantial return.

If you own a small business, there’s no reason to pay more than you have to. Be sure to take advantage of the tax incentives available. Start your savings with the five incentives found here.

The Home Business Tax Deductions

You likely know about the Home Business Tax Deduction, but do you know about the extent of the deductions you can claim by owning a home-based business?

From the interest on your mortgage payment to a portion of the costs of your cleaning materials, the savings potential is expansive.

Media Advertising Costs

There are certain types of media advertising you can deduct, as well. The following ad streams are considered “fully deductible:”

• Canadian market television
• Canadian market radio broadcast stations
• Canadian market newspapers and magazines

Hiring Your Child or Spouse

When you hire someone, the cost of the worker’s wages is considered a business expense. This is true even when the new employee is your child or spouse.

The difference is that you can also do some income splitting by hiring family members. By hiring your child or spouse, you can drop your net income to a lower tax bracket, providing a tax deduction.

Investment Tax Credits

Another one of the tax incentives for small business is Investment Tax Credits or ITCs. This allows you to subtract the cost of some types of property your business has acquired or expenditures you have incurred. This amount comes off the top of the tax amount you owe.

While there are some eligibility rules, if you qualify, it can be a significant tax break.

Apprenticeship Job Creation

Are you hiring tradespeople? If so, you may be eligible for a $2,000 investment tax credit.

This tax incentive is available if certain criteria are met. This criterion includes:

• You hire an apprentice
• The apprentice is working within the initial two years of their program

There is also the option to hire the apprentice and have them serve as a sole proprietor. If you do this, then you can take advantage of the Apprenticeship Job Creation Tax Credit.

Tax Incentives for Small Business: How Can You Save?

Keep in mind, the five tax incentives listed here are just the ones that most small business owners in Canada forget about.

There are more than a few others that can help you reduce your tax liability, as well.

If you have questions about other tax incentives, tax credits or deductions, reach out to our team. We will be happy to help answer any questions you have.

We also offer a wide array of taxation, accounting, and bookkeeping resources on our website to help you manage your small business.