Canadian Government Grants for Small Businesses

Public funding can be the key to starting your business. While most are familiar with funding, public funding includes more than just startup loans. It encompasses various tax credits and small business grants in Canada, all designed to support your business growth.

This article will explain these opportunities, covering federal and provincial tax credits, Canadian government grants for small businesses, and other types of public funding to help your business succeed.

Financial Support for Small Businesses Through Canadian Government Grants and Tax Credits

Tax credits are designed to boost your business growth. Often referred to as “tax breaks,” these credits lower your taxable income, and some can even result in a tax refund, giving your business more cash.

Here are some examples of Canadian government grants and tax credits for small businesses:

Scientific Research and Experimental Development (SR&ED) Tax Credit: Canada’s largest source of federal support for R&D, offering over $3 billion in tax incentives annually. It covers up to 69% of labor and overhead costs, 36% of contractor costs, and 45% of material costs for eligible activities.

Apprenticeship Job Creation Tax Credit (AJCTC): Offers up to $2,000 in tax credits for each eligible apprentice hired.

Canadian Film and Video Production Tax Credit (CPTC): Provides refundable tax credits up to 45% on eligible labor costs.

Green Energy Tax Credit: Offers 7.5% to 15% back on installation costs for green energy systems.

Agriculture Tax Credit: Available in provinces like British Columbia, Prince Edward Island, and New Brunswick, these credits help reduce taxes for farmers and agribusinesses.

Is a Grant Taxable Income?

A grant is considered taxable income. When your business receives a grant, it is generally included in your taxable income for the year. This means you will need to report the grant amount on your tax return and pay taxes on it. It’s important to understand the taxation of grants to ensure proper financial planning and compliance with tax regulations.

Specific Tax Credits and Their Benefits

Encouraging Research and Development Through SR&ED Tax Credit

The Scientific Research and Experimental Development (SR&ED) tax credit is available to individuals, small businesses, corporations, and trusts. This Canadian government grant promotes scientific and technological progress across various industries.

Apprenticeship Tax Credit Boosts the Economy

The Apprenticeship Job Creation Tax Credit (AJCTC) is an investment tax credit. If your business hires apprentices, you can get up to $2,000 in tax credits for each eligible apprentice. This is one of the Canadian government grants for small businesses to support workforce development.

Local Tax Credits Supports Regional Growth

Besides federal tax credits, there are many provincial and territorial credits available for your business. Here are a few examples:

Atlantic Provinces: New Brunswick, Newfoundland and Labrador, and Nova Scotia offer their own research and development tax credits.

Alberta: Provides the Innovation Employment Grant (IEG).

British Columbia: Has its SR&ED tax credit program.

Manitoba: Offers the Manitoba Research and Development Tax Credit.

Ontario: Includes the Ontario Innovation Tax Credit (OITC), Ontario Business-Research Institute Tax Credit (OBRITC), and Ontario Research and Development Tax Credit (ORDTC).

Saskatchewan: Offers the Saskatchewan Research and Development Tax Credit.

Yukon: Provides the Yukon Research and Development Tax Credit.

Canada’s Film and Video Production Tax Credit (CPTC)

This tax credit is available in Manitoba, Ontario, and Quebec. Canadian film production companies can get a refundable tax credit of up to 45% on eligible labor costs, depending on the province.

Tax Credit for Green Energy Equipment 

Property owners in Manitoba who install heat pump or solar thermal energy systems can get 7.5% to 15% of their installation costs back through Manitoba’s green energy tax credit. This Canadian government grant for small businesses helps reduce the expense of adopting green energy solutions.

Tax credits for agriculture

In British Columbia, Prince Edward Island, and New Brunswick, these tax credits help farmers, livestock producers, and agribusinesses reduce their taxes.

Other Examples of Regional Tax Breaks for Small Businesses

Here are some tax credits and grants for small businesses in Canada:

– Small-Business Venture Capital Tax Credit

– Tax Credits for Book Publishers

– Tax Credits for Digital Media Production Projects

There are over 80 specific tax credits available in different provinces and territories. Check the CRA website for a complete list.

You can find information on small business grants in Canada, including Canadian government grants for small businesses.

Canadian Grants Foster Small Business Growth

In addition to tax credits, your new business may be eligible for a grant.

Grants are like free money for your business, but unlike tax credits, they don’t reduce taxable income or generate a tax return. Instead, grants must be reported as income on your tax return.

Small business grants in Canada can fund:

– Search and rescue operations

– E-commerce adoption

– Organic farming

– Women in specific trades

– Book publishing

– Mining operations

​​Government Grants Benefit Small Businesses Across Industries

Here are some examples of industries in Canada that can get government grants:

– Manufacturers developing new products for commercial use

– Companies in oceanic industries like fisheries, aquaculture, and shipbuilding

– Businesses looking to adopt new technology

– Farms transitioning from conventional to organic methods

These grants can help various sectors grow and innovate. For more details, search for “Canadian government grants for small business.”

Women-owned business tax credit & grants

The Native Women’s Association of Canada (NWAC) provides $10,000 for women to train in trade industries. In Manitoba, there’s a program offering up to $50,000 to help women-owned businesses start or grow. Many other grants for women entrepreneurs are available throughout Canada. These grants can significantly aid women-owned business tax credits.

Grants for Startup Businesses Support New Ventures

The options for small business grants in Canada are incredibly diverse. Whether you’re launching a new business or purchasing an existing one, there’s likely a grant that fits your needs.

For instance, if you’re starting a book publishing business in Canada, you could receive up to $50,000 in funding.

Planning to start a mineral-prospecting business? Grants of up to $12,000 are available.

There are numerous opportunities! The Canadian government website offers a comprehensive list of grants for small businesses.

FAQ’s

What do you mean by tax credit?

Tax credits are designed to boost your business growth. Often referred to as “tax breaks,” these credits lower your taxable income, and some can even result in a tax refund, giving your business more cash. Examples include the Scientific Research and Experimental Development (SR&ED) Tax Credit and the Apprenticeship Job Creation Tax Credit (AJCTC).

What is the difference between tax and grants?

Tax credits reduce your taxable income or even provide a tax refund, offering financial relief directly tied to your tax liabilities. On the other hand, grants are like free money for your business but must be reported as income on your tax return. They do not reduce your taxable income or generate a tax return.

How are grants taxed in Canada?

A grant is considered taxable income in Canada. When your business receives a grant, it is generally included in your taxable income for the year. You will need to report the grant amount on your tax return and pay taxes on it. Understanding the taxation of grants ensures proper financial planning and compliance with tax regulations.

What is a grant in taxation?

In the context of taxation, a grant is a financial award given by the government that must be reported as taxable income. This means that while a grant provides financial support, it also increases your taxable income for the year, necessitating accurate reporting and tax payments.