I have run into a problem. If I claim an ITC on sch 31, it it SUPPOSED to be deducted from the following year’s UCC. But TaxCycle is not picking this up. In the days when I used CanTax, it was automatic. The ITC claimed in year 1 was automatically carried forward to sch 8, line 205 in year 2. Any comments?
Not sure, since I’ve never used it, but wondering - can you use S31 for anything other than SR&ED?
Yes, investment tax credits are available in some regions for qualified investments in the manufacturing industry. So, if your client is a micro-brewery, for example, and they invest $100,000 in new equipment, they qualify for a 10% ITC, or $10,000. This can be applied against federal taxes only, not provincial. If it can’t be used in the year of investment, 40% of the 10% is refunded. So, that would be $4,000. Unused amounts get carried forward to be used in future years. In the year following the claim, the $10,000 gets deducted from the UCC of the related asset class, regardless of how much gets used. That’s where TaxCycle missed the boat. I’m going to have to submit a corrected sch.8 and pay the interest & penalty on the extra tax to be assessed. The nice thing for purchases of mfg equipment since Nov.20/18 is that they qualify for the 10% investment tax credit, plus a 100% CCA rate with no half year rule. Years ago, there was a provincial investment tax credit available as well. It complicated things considerably, but, as I remember, CanTax handled it correctly.
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Sure you can.
What about the Part 19 Apprenticeship Job Creation Tax Credit?
Any corporation that has employed eligible apprentices working during the first 24 months of their training agreement or contract registration should be completing & filing a schedule 31 and claiming a 10% (max $2k/yr) Investment Tax Credit on the apprentice’s wages.
All provincial Red Seal trades qualify for the credit.
For the AJCTC TaxCycle does automatically include the inducement income on Schedule 1 the following year.
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Awesome. Might be useful for one or two of my clients. Thanks Harley and Wayne!
Yes, that’s another nice credit. My first use of it was for a 2019 return that I amended after submitting the original and after my client mentioned they had a couple of apprentices. The credit was done correctly on Sch.31, but it did not show up as a Sch.1 adjustment in either 2019 or 2020. Which was fine with me since the $4,000 was already included in the reported income. For 2020, my original filing included $6,000 for 3 apprentices. So, the 2020 carryforward to S1 should have been $4,000. Instead, it was $6,000. Somehow, the S1 Inducement Refund Worksheet pulled in the wrong amount. Whatever gets added back on line 295, I deduct on line 395. I guess I should contact TaxCycle to see why my numbers aren’t carried forward correctly.
There’s another nice program available here in Nova Scotia through the Apprenticeship Section of the Dept. of Labour. It provides the employer with $25,000 per apprentice and is paid based on the apprentice reaching certain milestones. There’s $2,500 paid when the apprentice is registered, $5,000 as they reach their 1st, 2nd, 3rd, and 4th levels of the program, and a final $2,500 when they pass their certification exam. That’s bumped to $30,000 for a diverse employee. So, it’s a real incentive for employers to hire apprentices and keep them employed.
You also have to remember the industries that are not manufacturers, but are part of the manufacturing process. and, therefore, also qualify. For example, if your client trucks logs from the logging road to the sawmill, The truck, trailer, and loader attached to the trailer all qualify as manufacturing assets. The manufacturing process starts with the tree harvester cutting the tree and ends when the finished lumber is packed, wrapped, and ready for shipment. But, if you miss the deadline for claiming an ITC, CRA has absolutely no mercy. If you don’t file a claim within 12 months of the tax return deadline, you’re SOL. Depending on the damage, you either make a deal with your client, or contact your insurer.
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