Business Owners:  Claim the Small Businesses Air Quality Improvement Tax Credit

Evelyn Jacks

The Small Businesses Air Quality Improvement Tax Credit is now law, and it could be a lucrative return for those who improve their business premises. The business owner can also reach back and make the claim for expenses incurred in 2021. Details follow:

The Small Businesses Air Quality Improvement Tax Credit allows for a return of 25% of qualifying expenses for ventilation systems and air filtration devices of up to $10,000 per location to a maximum of $50,000.  As mentioned, the expenses could occur between September 1, 2021 and December 31, 2022.  The amounts are claimed in the tax year in which the expenses incurred, therefore tax specialists and their clients will want to reach back to review renovation costs to see if an adjustment to a prior filed return should be made.

Qualifying expenses include those directly attributable to purchase, installation, upgrade or conversion of mechanical heating, ventilation and air conditioning systems, as well as air filtration systems using high efficiency particulate air filters.  The government has outlined other specifics for qualifying expenditures which should be discussed with a tax specialist in advance of purchase.  

Amongst those expenses that are not allowed are any expenses made or incurred under a contract before September 1, 2021.  No costs that are recurring or routine repairs and maintenance will qualify.  Financing costs will not be allowed; either will any expenses paid to someone with whom the entity does not deal with at arm’s length.  Also prohibited is salary or wages paid to an employee of the entity for these purposes.

In addition, qualifying expenses must be reduced by any government assistance received for the expense.

For more information, and to adjust tax returns, speak to a DFA- Personal Tax Services Specialist™.  

Those who are interested in earning their specialized credentials as a DFA-Tax Services Specialist may enrol now for Summer School, with tuition reductions available until June 30.