Nova Scotia corporate tax reduction for new small businesses

This tax reduction applies to the first three tax years of an eligible corporation if it is also eligible for the federal small business deduction for the tax year.

For each of the three tax years, an eligible corporation must apply to the Department of Finance and Treasury Board of Nova Scotia 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.

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

and

  • have at least two employees, one of whom must be full‑time and not related to a specified shareholder of the corporation

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.

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