Small Business Air Quality Improvement Tax Credit

The government has proposed a new small business air quality improvement tax credit. The credit is worth up to $2,500 per business location or $12,500 for an affiliated group with five locations.

Overview

The credit is 25% of eligible expenditures incurred by an eligible entity during the period of September 1, 2021 to December 31, 2022, to a maximum expenditure of $10,000 per location and $50,000 shared among affiliated businesses. In addition the credit is refundable, meaning a corporation that is in a loss position could still get the credit.

Eligible Expenditures: Outlays and expenses that are directly attributable to the purchase, installation, conversion, or upgrade of a new or retrofitted HVAC system placed in service at a qualifying location. This also includes expenses directly attributable to the purchase of a device that is placed in service at a qualifying location and designed to filter air using a HEPA filter.

Qualifying Location: Real property in Canada used by the eligible entity primarily in the course of its ordinary commercial activities (including rental activities). The definition excludes a self-contained domestic establishment.

Eligible Entity: Individuals (other than a trust), a qualifying corporation, or a partnership whose partners are eligible entities.

Qualifying Corporation: A CCPC with taxable capital of the associated group less than 15M.

Could this impact your business? Give us a call to discuss.

For more details, visit the Government of Canada’s website here.