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. The corporation has to be 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:
- be a Canadian-controlled private corporation incorporated in Nova Scotia, or
- be a corporation incorporated outside the province, but inside of Canada, that
- pays at least 25% of its wages to employees who are resident in the province, and
- has its head office in the province
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.
Claiming the tax reduction
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. See the schedule for more details.
On line 834 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the certificate number, and on line 556, enter the amount of the reduction you are claiming.
Supporting documents – File the original or a copy of the eligibility certificate issued by the province with your return.
Forms and publications
Government partners
- Nova Scotia (provincial site)
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