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New Small Business Regulations made under Section 42 of the
Income Tax Act
R.S.N.S. 1989, c. 217
O.I.C. 2002-322 (June 28, 2002), N.S. Reg. 87/2002
1 These regulations may be cited as the New Small Business Regulations.
2 In these regulations, "Act" means the Income Tax Act.
Application of regulations
3 These regulations apply to a taxation year of a corporation ending on or after March 30, 2001.
Additional terms and conditions of eligibility for deduction under Section 42 of the Act
4 (1) For purposes of this Section, a "full time equivalent" means one or more individuals whose total paid hours of employment are not less than 1300 in a 12-month period, or an equivalent amount pro-rated for a short taxation year.
(2) In addition to the eligibility requirements set out in Section 42 of the Act, a corporation is not eligible for a deduction pursuant to subsection 42(4) of the Act unless the corporation employs at least 2 individuals, at least 1 of whom shall be a full time equivalent who is not related to a specified shareholder of the corporation.
Order in which deduction to be taken under Section 42 of the Act
5 (1) Where a corporation is eligible in a taxation year for a deduction pursuant to subsection 42(4) of the Act, the corporation shall not calculate the deduction or reduce its tax payable by the amount of the deduction until the corporation has made all other allowable deductions to tax payable to which it is entitled pursuant to the Act.
(2) For greater certainty, all other allowable deductions to tax payable that are referred to in subsection (1) include the deductions allowed pursuant to Sections 41, 47 and 49 of the Act.
Time limit for application for certificate of eligibility
6 For the purposes of subsection 42(12) of the Act, a corporation is not eligible for a certificate of eligibility unless the corporation applies to the Minister within the 3 years immediately following the taxation year for which the deduction is to be claimed.