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New Small Business Tax Deduction (Corporate Tax Holiday)

The New Small Business Tax Deduction (also known as the Corporate Tax Holiday) eliminates provincial corporate income tax for eligible new small businesses for the first 3 taxation years after incorporation.

Eligibility

You can apply if your business qualifies for the federal small business deduction for the applicable tax year and maintained a permanent establishment in Nova Scotia at any time during that year.

Eligible businesses are new Nova Scotia businesses that:

  • have at least 2 employees (1 needs to be fulltime and unrelated to any shareholder for the specified taxation year),
  • are not in a partnership or joint venture with an ineligible corporation,
  • are not a beneficiary of a trust where any beneficiary is ineligible,
  • are not a previous active business with essentially the same owners or related owners,
  • are not a professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor, and
  • are not a business carrying on the same, or substantially the same, business activity that it carried on as a sole proprietorship, partnership or corporation.

How to Apply

  • You can apply at the end of each of your corporation's first 3 tax years. Or you can apply for up to 3 years after your corporation's year end for the specified tax years.

    Applications for your 2nd or 3rd year won't be processed until you submit applications for your previous tax years (even if your company is ineligible for those tax years).

    1. File your corporate income tax return and Schedule 341 with the CRA.
    2. Complete the application form (you can apply annually for up to 3 years).
    3. Include your company's corporate income tax return for the relevant taxation year (including Schedule 341).
    4. Send your completed application and supporting documents by email to the New Small Business Tax Deduction Administrator.
    5. After you get your Eligibility Certificate, you can adjust your corporate income tax return to claim the New Small Business Tax Deduction.
    6. Application packages must be submitted via email to the New Small Business Tax Deduction administrator (paper applications will not be accepted).

      It should take about 5 weeks to process your application. It can take longer if more information is needed or if your form hasn't been filled in correctly

Before you apply

Before you start, make sure you have the following:

  • CRA Business Number
  • Incorporation date
  • List of shareholders and their individual percent of shares
  • Total hours worked in the tax year by each full-time employee unrelated to any shareholders
  • Percent of total wages and salaries paid by the corporation in the tax year to employees who are Nova Scotia residents
  • Signature of authorized signing officer
  • Corporate income tax return for the relevant taxation year (including Schedule 341)

Related Legislation and Regulations

 

New Small Business Tax Deduction

Orange ClockFor More Information


Samantha Thomson
Tel: 
902-424-5388
Email: Samantha.Thomson
@novascotia.ca


Forms
Downloads


Download the New Small Business Application (pdf)