Nova Scotia
Nova Scotia
The lower rate of Nova Scotia income tax is 2.5%.
The income eligible for the lower rate is determined using the $500,000 Nova Scotia business limit.
The higher rate of income tax is 14%. The rate applies to taxable income earned in Nova Scotia that does not qualify for the lower rate.
These rates also apply to taxable income earned in the Nova Scotia offshore area.
You can use Schedule 346, Nova Scotia Corporation Tax Calculation, to help you calculate the Nova Scotia tax before the application of credits. You do not have to file it with your return. See the schedule for more details.
On line 215 and/or 220 of Schedule 5, enter the amount of tax calculated.
Nova Scotia political contribution tax credit
You can claim a tax credit on contributions made to candidates and recognized parties, as defined under the Nova Scotia Elections Act.
The annual amount of the credit is the lesser of:
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75% of the total contributions
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$750
You do not have to file official receipts with your return. However, keep them in case the CRA asks for them later. The CRA can accept photocopies only if the issuer certifies them as true copies.
On line 893 of Schedule 5, enter the total amount of qualifying contributions, and on line 550 enter the amount of the credit you are claiming.
Nova Scotia food bank tax credit for farmers
Corporations that carry on a farming business in Nova Scotia may claim a non-refundable tax credit equal to 25% of the amount of the qualifying donation that is deducted the same year under section 110.1 of the federal Income Tax Act for the donation. A qualifying donation is a donation to an eligible food bank of one or more agriculture products produced in Nova Scotia.
To claim the credit, file a completed Schedule 2, Charitable Donations and Gifts, with your return. For more details, see the schedule.
On line 570 of Schedule 5, enter the amount of the credit earned in the current year.
Nova Scotia corporate tax reduction for new small businesses
This tax reduction eliminates the Nova Scotia corporation income tax for new corporations that carry on eligible new small businesses for the first three tax years after incorporation if the corporation is also eligible for the federal small business deduction.
An eligible corporation must apply to the Nova Scotia Department of Finance and Treasury Board and receive an eligibility certificate before claiming the tax reduction. Once the eligibility certificate is received, the corporation can claim this tax reduction to reduce Nova Scotia income tax otherwise payable. To claim the tax reduction each tax year, the corporation must receive an eligibility certificate for each of the three tax years.
An eligible corporation must:
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be a Canadian-controlled private corporation incorporated in Nova Scotia, or
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be a corporation incorporated outside the province, but inside of Canada, that
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pays at least 25% of its wages to employees who are resident in the province, and
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has its head office in the province
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An eligible corporation must also have at least two employees, one of whom is not related to a specified shareholder of the corporation. One or more employees not related to a shareholder must have at least 1,300 total paid hours of employment in a 12-month period, or an equivalent amount prorated for a short tax year.
Schedule 341, Nova Scotia Corporate Tax Reduction for New Small Businesses, is a worksheet to calculate the credit. You do not have to file it with your return.
To claim the tax reduction, file the original or a copy of the eligibility certificate issued by the province with your return.
On lines 834 and 556 of Schedule 5, enter the certificate number and the amount of the reduction you are claiming.
Nova Scotia innovation equity tax credit
This credit is made available to corporations resident in Nova Scotia who make eligible capital investments in eligible Nova Scotia small and medium size corporations engaged in innovative activities after March 31, 2019, and before March 1, 2024.
The Nova Scotia innovation equity tax credit, which was set to end February 29, 2024, has been extended five years to March 1, 2029.
The credit is equal to 15% of the eligible investment. The minimum investment amount is $50,000 and the maximum annual investment amount is $500,000.
The credit is not refundable. Apply the credit first to reduce the tax payable for the year to zero. If unclaimed credits remain, you can carry them back to the three previous tax years or carry them forward to the seven following tax years.
The minister of Finance and Treasury Board for Nova Scotia will issue a tax credit certificate to corporations that make an eligible investment in an approved corporation.
To claim the credit, file the original or a copy of the tax credit certificate issued by the province with your return along with a completed Schedule 349, Nova Scotia Innovation Equity Tax Credit. For more details, see the schedule.
On line 562 of Schedule 5, enter the amount of the credit you are claiming.
Nova Scotia venture capital tax credit
This credit is available to corporations who invest in a qualifying venture capital fund after March 31, 2019, and before April 1, 2024.
The Nova Scotia venture capital tax credit, which was set to end March 31, 2024, has been extended five years to March 30, 2029.
The tax credit is equal to 15% of an eligible investment up to a $500,000 maximum annual investment.
The credit is not refundable. Apply the venture capital tax credit first to reduce the tax payable for the year to zero. If unclaimed credits remain, you can carry them back to the three previous tax years or carry them forward to the seven following tax years.
The minister of Finance and Treasury Board for Nova Scotia will issue a tax credit certificate to corporations that make an eligible investment in a qualifying venture capital fund.
To claim the credit, file the original or a copy of the tax credit certificate issued by the province with your return along with a completed Schedule 350, Nova Scotia Venture Capital Tax Credit. For more details, see the schedule.
On line 563 of Schedule 5, enter the amount of the credit you are claiming.
Nova Scotia research and development tax credit
You can claim this credit if you have a permanent establishment in Nova Scotia and if you made eligible expenditures for research and development carried out in Nova Scotia. The credit is equal to 15% of eligible expenditures.
The credit is fully refundable, but must be applied first against total taxes payable.
You can renounce the research and development tax credit for eligible expenditures incurred during the year under subsection 41(7) of the Income Tax Act (Nova Scotia).
To calculate and claim the credit, file a completed Schedule 340, Nova Scotia Research and Development Tax Credit, with your return no later than 18 months after the corporation's tax year-end. See the schedule for more details.
On line 566 of Schedule 5, enter the amount of credit earned in the year.
Recapture of Nova Scotia research and development tax credit
A corporation that disposed of a property used in research and development, or converted the property to commercial use, may have to report a recapture of any Nova Scotia research and development tax credit previously calculated on that property. Any recapture will create or increase Nova Scotia tax otherwise payable.
To calculate the recapture, complete Schedule 340, Nova Scotia Research and Development Tax Credit. See the schedule for more details.
On line 221 of Schedule 5, enter the amount of recapture calculated.
Nova Scotia digital media tax credit
The minister of Finance and Treasury Board for Nova Scotia will issue a tax credit certificate to a corporation producing an eligible product in the province.
An eligible employee has to be a resident of Nova Scotia for tax purposes during the production period.
The credit is based on the qualifying expenditures incurred before January 1, 2026, and is limited by total expenditures.
The Nova Scotia digital media tax credit, which was set to end December 31, 2025, has been extended five years to December 31, 2030.
The amount of the credit is the lesser of:
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50% of qualifying expenditures
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25% of total expenditures
A bonus of 10% of qualifying expenditures or 5% of total expenditures is available for developing an eligible product in a prescribed geographic area. An eligible corporation must have no less than 50% of eligible salaries paid to employees who normally report to a permanent establishment of the eligible corporation in the prescribed geographic area of the province.
This credit is refundable, but must be applied first against total taxes payable.
To claim the credit, file the original or a copy of the certificate issued by the province with your return.
If there is only one certificate, enter the certificate number on line 838 of Schedule 5. If there is more than one certificate, complete Schedule 347, Additional Certificate Numbers for the Nova Scotia Digital Media Tax Credit, and file it with your return.
On line 567 of Schedule 5, enter the amount of the credit earned in the current year.
Nova Scotia digital animation tax credit
This credit provides incentive for digital animation productions that start key animation before January 1, 2026.
The Nova Scotia digital animation tax credit, which was set to end December 31, 2025, has been extended five years to December 31, 2030.
An eligible employee has to be a resident of Nova Scotia on the last day of the calendar year just before the year for which you claim the tax credit. The maximum of an employee's eligible salary is $150,000 per production.
Send a Part A application for an eligibility certificate to the Department of Finance and Treasury Board of Nova Scotia before the start of key animation of a digital animation production.
After the production is completed, file a Part B application for a tax certificate.
The credit is the sum of:
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50% of qualifying expenditures deducted by total assistance
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17.5% of eligible digital animation labour expenditures
This credit is refundable, but must be applied first against total tax payable.
To claim the credit, file the original or a copy of the tax certificate issued by the province with your return.
If there is only one certificate, enter the certificate number on line 839 of Schedule 5. If there is more than one certificate, complete Schedule 348, Additional Certificate Numbers for the Nova Scotia Digital Animation Tax Credit, and file it with your return.
On line 569 of Schedule 5, enter the amount of the credit earned in the current year.
Nova Scotia capital investment tax credit
An eligible corporation must submit to the Department of Finance and Treasury Board of Nova Scotia:
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a Part A application for an eligibility certificate to find out if the project is eligible
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then, Part B applications for tax credit certificates after the end of each tax year in which qualified property is acquired
An eligible corporation can claim this tax credit on qualified property acquired before January 1, 2030, for use in Nova Scotia as part of an approved project that is more than $15 million in total cost.
The refundable credit equals 25% of the capital cost of qualified property. The maximum tax credit available for each approved project is $100 million across the duration of the project. For qualified property acquired before October 1, 2022, the rate was 15% and the amount $30 million.
The credit is available to corporations:
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mainly in the manufacturing and processing, farming, fishing, logging sectors
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transporting freight, including satellites, by space vehicle into orbit
To claim the credit, file the original or a copy of the tax credit certificate issued by the province with your return.
If there is only one certificate, enter the certificate number on line 841 of Schedule 5. If there is more than one certificate, complete Schedule 351, Additional Certificate Numbers for the Nova Scotia Capital Investment Tax Credit, and file it with your return.
On line 568 of Schedule 5, enter the amount of the credit you are claiming.
Nova Scotia financial institutions capital tax
For tax years starting after October 31, 2021, a provincial tax is levied on the taxable capital of financial institutions that have a permanent establishment in Nova Scotia at any time in the tax year. This tax applies to banks (including authorized foreign banks) as well as trust and loan companies.
The tax is equal to 4% of the financial institution's taxable capital employed in the province for the year, including the offshore area.
When calculating its taxable capital (before allocation to the province), a financial institution can deduct a basic capital deduction plus the amount of its investment in related financial institutions for the tax year.
For a tax year, a basic capital deduction of $5 million is available to a financial institution if the total amount of the capital of the financial institution and its related financial institutions, if any, is $10 million or less. If the financial institution is a member of a related group, the financial institution's entitlement to the $5 million capital deduction could be deemed to be nil unless it files an agreement allocating the basic capital deduction among the group.
The basic capital deduction is increased to $30 million if the financial institution is a trust company or a loan company with its registered office in Nova Scotia.
Use Schedule 353, Nova Scotia Financial Institutions Capital Tax - Agreement Among Related Corporations, to allocate the basic capital deduction. File this agreement with your return.
Corporations that are liable to pay this tax have to file Schedule 352, Nova Scotia Financial Institutions Capital Tax.
On line 222 of Schedule 5, enter the provincial tax on financial institutions payable.
A penalty applies to financial institutions that have to pay this tax and do not file the required return on time. For details, see "Penalties" for large corporations on page 16.
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