New Form T2038 Investment Tax Credits

The Atlantic Investment Tax Credit provides a 10% refundable tax credits for certain investments in new buildings, machinery and equipment used in the Atlantic region and the Gaspé Peninsula, in farming, fishing, logging, manufacturing and processing, oil & gas, and mining industries.

In last year’s federal budget, the credit was phased out for investments in the oil & gas and mining sectors.

The credit is available at a rate of 10% for assets acquired before 2014 for use in oil & gas and mining activities; 5% for those acquired in 2014 and 2015 and 0% for such assets acquired after 2015. For grandfathered project phases, the credit will apply at a rate of 10 per cent for assets acquired by a taxpayer before 2017.

The availability of the credit for assets acquired for use in other activities will not be affected.  If you earned an investment tax credit (ITC) during the current taxation year or are claiming a carry forward of an ITC from a previous year fill out Part A of form T2038. This form must be filed no later than 12 months after the filing due date of your income tax return for the tax year in which you acquired the property or made the expenditure.

If all of the ITC is not used to reduce your taxes in the current year or the previous three, the Canada Revenue Agency (CRA) may refund up to 40% of the unused credit to you. As mentioned above, Part B of this form pertains to refunds, and specifically, line 454 must be completed to make such a claim.

For the complete form and more information click here.