What Investment Tax Credits Can I Claim in Canada?

What are investment tax credits in Canada?

An investment tax credit is a tax incentive that helps offset the cost of certain business investments or activities that governments want to encourage. If claimed on your annual tax return, an investment tax credit directly reduces the amount of tax you owe.

In Canada, investment tax credits are available for a range of activities. Some of the investments that may qualify include:

• Research and development on a new product, technology, or process
• Clean technology or clean energy projects
• New digital tools or systems
• Hiring and training an eligible apprentice in a skilled trade
• Investments in a mining project that passes eligible exploration expenses on to investors
• Purchasing qualifying equipment, machinery, or other property used in certain industries or regions

So, if you spent money on a qualifying activity and checkmark all the eligibility boxes, you may be able to claim a portion of those eligible expenses on your return.

How do investment tax credits work?

Investment tax credits are generally calculated as a percentage of eligible expenses.

For example, Nova Scotia’s R&D tax credit is fully refundable at the rate of 15% of eligible expenditures for qualified scientific research and experimental development. A company that spends $100,000 on R&D would receive a $15,000 tax credit.

The payoff of investment tax credits could be a lower tax bill and, in some cases, a tax refund.

A quick note: there’s a big difference between a tax credit and a tax deduction. A tax deduction lowers your taxable income before your tax is calculated, while a tax credit reduces how much tax you owe after that calculation is made.

“Think of it this way: a tax deduction shrinks the income you’re taxed on, while a tax credit shrinks the tax bill itself,” says Sanderson.

Refundable vs. non-refundable tax credits

Not all investment tax credits work the same way. One of the most important distinctions is whether a credit is refundable or non-refundable.

• A refundable tax credit is the amount you can receive regardless of how much income tax you pay. For example, if you owe $1,000 in tax and qualify for a $1,500 refundable credit, your tax bill could be reduced to $0, and you could get the remaining $500 as a refund.
• A non-refundable tax credit can lower your income tax payable, but it can’t reduce it below zero. Think of it as a discount on your tax bill. For example, if you owe $1,000 in tax and qualify for a $1,500 non-refundable credit, the credit could reduce your tax bill to $0, but you wouldn’t get the remaining $500 as a refund.

Whether an investment tax credit is refundable or non-refundable depends on the program and who’s claiming it. Some credits may have different rules for individuals, corporations, and certain types of businesses.

What are the common investment tax credits in Canada?

Some investment tax credits reward businesses for developing new technology. Others encourage investment in clean energy, digital innovation, or specific regions of the country. Here are a few to explore:

Scientific Research and Experimental Development (SR&ED) tax incentives

If your business is developing new products, improving processes, or tackling technical challenges in Canada, your work may qualify for Scientific Research and Experimental Development (SR&ED) tax incentives.

“It’s one of the most widely claimed investment tax incentives, and very few claims are turned down,” says Sanderson. “If you’re experimenting, testing, or trying to solve a problem in a new way, it’s worth taking a look at whether SR&ED applies.”

SR&ED offers two types of incentives: tax deductions against income and investment tax credits. Depending on the type of business, the work being done, and the expenses involved, an SR&ED credit may reduce tax payable, result in a refund, or do a bit of both.

Clean economy

Going green may be good for the planet—and your tax bill. Canada offers several clean economy investment tax credits to encourage businesses to support the transition to net zero emissions.

“Switching to cleaner technology often requires a significant upfront investment,” says Sanderson “These credits help make it easier for businesses to get started.”

Clean economy investment tax credits may apply to investments in:

• Clean technology
• Clean electricity projects
• Clean hydrogen production
• Clean technology manufacturing
• Carbon capture, utilization, and storage technologies

Interactive digital media tax credit (BC only)

The interactive digital media tax credit (IDMTC) is a refundable tax credit for companies developing interactive digital media products in British Columbia, including video games, educational software, simulators, and edutainment. You can claim 25% of eligible salary and wages incurred after August 31, 2025, and 17.5% of eligible salary and wages incurred before September 1, 2025.

Regional Opportunities Investment Tax Credit (Ontario only)

Sometimes, it’s not what you’re investing in that matters—it’s where. Provinces or territories may offer investment tax credits that encourage businesses to expand to certain areas.

Ontario’s Regional Opportunities Investment Tax Credit, for example, is a 10% refundable income tax credit for corporations that invest $50,000 to $500,000 within one tax year to construct, renovate, or acquire eligible commercial and industrial buildings in certain parts of the province. The goal is to attract investment, create jobs, and support economic growth in communities that need it. The tax credit is available until January 1, 2027.

Find more provincial and territorial R&D tax credits. Note that they might reduce the expenses you can claim through the federal SR&ED program.

How to claim an investment tax credit

Claiming an investment tax credit usually comes down to a few key steps:

• Check eligibility rules. Each credit has its own rules, deadlines, and details—which can change over time—so confirm that your investment, expenses, or activities qualify.
• Keep detailed records. Save invoices, receipts, contracts, payroll records, and any other relevant documents. Incomplete documentation could mean your claim will be denied or reassessed. Plus, the Canada Revenue Agency (CRA) requires you to keep records and supporting documents for 6 years from the end of the year they pertain to.
• Claim the credit when you file. Depending on the program, you may claim the credit on your personal tax return or corporate tax return.
• Check the carry-forward rules. In many cases, unused investment tax credits can be carried back up to 3 years or carried forward up to 20 years.
• When in doubt, ask a tax pro. If you need help with investment tax credits, TurboTax experts can help pinpoint those you might qualify for and guide you through the claim process.

Federal vs. provincial and territorial investment tax credits

Federal credits are administered by the CRA and generally apply across Canada. But provinces and territories may offer investment tax credits, too, with different rates, rules, and requirements.

The takeaway? Cast a wide net. Check both CRA and provincial and territorial tax authority websites and consider consulting a tax expert to make sure you’re not leaving money on the table.

Investment tax credits: Good for Canada and your tax bill

Investment tax credits are essentially the government’s way of saying, “Thanks for investing in Canada’s future.”

Whether you’re developing a cool new app or investing in clean energy projects, there may be tax savings with your name on them. The key is knowing where to look—and making sure you claim what’s available.