Has your corporation acquired (or constructed or renovated) a commercial or industrial building in Ontario since March 25, 2020? If so, your corporation may be eligible for a refundable tax credit of up to $90,000 for each taxation year in which a qualifying investment has been made.
A number of requirements apply in order to be eligible for the credit, which are summarized below. If your corporation has made a qualifying investment and has not claimed the credit, we would be happy to assist you with filing or amending your corporation’s return to take full advantage of the Regional Opportunities Investment Tax Credit (“ROITC”).
The corporation applying for the credit must:
- be a Canadian-controlled private corporation throughout the fiscal year in which the credit is claimed;
- make a qualifying investment (see below) in a designated region (see below) of Ontario; and
- have a permanent establishment, such as a head office, anywhere in Ontario at the time the qualifying investment is made.
Note if the corporation is one of an associated group, only one corporation in the group may apply for the credit for a given fiscal year. Also, there may not be any overlap between the fiscal years of different corporations within the associated group making ROITC claims.
Qualifying Investments, Designated Regions, and Amount of Credit
Qualifying investments are expenditures that are included in Class 1 or 6 for capital cost allowance purposes and are located in a designated region. Generally, these are commercial or industrial buildings located outside of the following centres: the Greater Toronto Area, the Kitchener-Waterloo-Barrie region, the Hamilton-Niagara region, and the Ottawa region. Residential buildings do not qualify.
The credit is generally calculated at 10% of the qualifying investment over $50,000, capped at $500,000, for a maximum credit of $45,000 (10%*($500,000 – $50,000)). The credit is also temporarily enhanced to 20% for qualifying investments made between March 24, 2021 and December 31, 2023, resulting in a maximum credit up to $90,000 for qualifying investments made within that time frame that meets the eligibility criteria.
If you have questions about these or other matters, please do not hesitate to contact a Melo LLP advisor for assistance.
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