This deduction effectively eliminates the Nova Scotia corporate income tax for the first 3 taxation years of a new small business after incorporation. The corporation must apply each year to the Nova Scotia Minister of Finance and Treasury Board for a Nova Scotia Tax Deduction Eligibility Certificate.
Eligibility
All new businesses incorporated in Nova Scotia after April 18, 1986 that are:
- Have at least two employees, one of whom must be full-time and unrelated to any shareholder, for the specified taxation year
- Are not associated with another corporation(s)
- Are not in a partnership or a joint venture with an ineligible corporation(s)
- Are not a beneficiary of a trust where any beneficiary is ineligible
- Are not a previous active business with essentially the same owner(s) or related owner(s)
- Are not a professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor
- Are not a business carrying on the same, or substantially the same, business activity as was carried on as a sole proprietorship, partnership or corporation
- For complete requirements for eligibility see
- Section 42 Income Tax Act (Nova Scotia)
- Related regulations
How to Apply
- The application form should be filed at the end of each of the corporation’s first 3 taxation years.
- Nova Scotia Department of Finance and Treasury Board will not issue a certificate of eligibility to an eligible company until it has received an application form with a Canada Revenue Agency Form 341.
- Nova Scotia Department of Finance and Treasury Board requires a separate application form for each taxation year.
- Applications must be received by the Department of Finance and Treasury Board within three years of the corporations taxation year end.
- Please note that due to confidentiality, a signed Letter of Authorization from the applicant company is required before the department will discuss any matter with anyone other than the applicant company.
- Applications for previous taxation years must be received before current applications will be processed, even if the company would have been ineligible for that taxation year.