Definitions and detailed information (continued) | |||||||||||||||||
How to calculate and claim your ITC | |||||||||||||||||
The ITC is based on a percentage of the investment cost (the cost of the property you bought or the expenditures you made). If you received, are entitled to receive, or can reasonably expect to receive any reimbursement, inducement, or government or non-government assistance (including grants, subsidies, forgivable loans, or deductions from tax and investment allowances) that can reasonably be considered to relate to the property or expenditure, you have to decrease your investment cost by the amount you received, are entitled to receive, or can reasonably expect to receive. If you repay any of this assistance, add the repayment to the investment cost. Calculate the ITC for any repayment using the same percentage you used for the original investment cost. |
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Determine your ITC at the end of 2019. If the fiscal year-end of your business is in 2019, include any ITC you earn on the property you buy during the calendar year. Investments and expenditures are eligible for an ITC only when the income from the related business is subject to Part I of the Income Tax Act. |
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Properties acquired are eligible for an ITC claim only when the properties are considered to be available for use. For an explanation of available for use, see any of the following guides: T4002, Business and Professional Income, T4003, Farming and Fishing Income, RC4060, Farming Income and the AgriStability and AgriInvest Programs-Joint Forms and Guide, RC4408, Farming Income and the AgriStability and AgriInvest Programs Harmonized Guide. |
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You can use the ITC that you earn in 2019 to reduce your federal tax for a previous year, for the 2019 tax year or for a future year. Any unused ITC credits may be refunded. |
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Current-year claim: | |||||||||||||||||
To calculate your ITC to reduce your federal income tax for 2019 complete parts A to D of this form. Enter the amount of your credit on line 41200 of your income tax and benefit return (T1 for Individuals). If a partnership or trust made the investments, enter only your share of the credit on line 67135 in Part A. |
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Carryback to previous years: | |||||||||||||||||
You can carry back the ITC you earn in 2019 for up to three years and use it to reduce your federal tax in those years by completing Part E of this form. If you are a trust and were subject to a loss restriction event, special rules may apply to limit the ITC carryback. |
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Carryforward to future years: | |||||||||||||||||
You can carry forward unused ITCs earned in tax years that end after 1997 for up to 20 years (see Part D to calculate your claim). For information on loss restriction events, see subsection 251.2(2) of the Act. |
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Refund of ITC | |||||||||||||||||
If you do not use all of your ITC to reduce your taxes in the year or in the three previous years, we may refund up to 40% of your unused credit to you. You can only claim this refund in the year you buy property or make an expenditure that qualifies for the credit, unless the available for use rules (or other rules deeming the expenditure to have been made in a later year) apply. To claim a refund of ITC, complete Part E of this form. Enter your refund amount on line 45400 of your income tax and benefit return (T1 for Individuals). If a partnership or trust made the investments, enter only your share of the amount. |
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Adjustments | |||||||||||||||||
The credit you claim or that we refund to you for 2019 reduces the capital cost of the property. Any 2019 credit you carry back to a previous year will also reduce the capital cost of the property. Make this adjustment in 2020. This adjustment reduces the capital cost allowance you can claim for the property. It also affects your capital gain when you dispose of the property. You might have claimed a credit or received a refund for 2019 for a property that you already disposed of. In addition, you might still have other property in the same class. If so, reduce the undepreciated capital cost of the class for 2020 by the amount of the credit you claimed or received as a refund. If, after the disposition, you do not have any property left in the same class, include in your 2020 income the amount of the credit you claimed or received as a refund. Enter the amount as other income on line 9600 if you are filing Form: T2121, T2042, T1163, T1164, T1273, or T1274. Enter the amount on line 8230 if you are filing Form T2125. |
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A credit deducted or refunded for SR&ED will reduce the pool of deductible SR&ED expenditures, the adjusted cost base (ACB) of an interest in a partnership, and the ACB of a capital interest in a trust in the next tax year. |
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For more information on ITCs and their recapture, go to cra.gc.ca, or see Interpretation Bulletin IT411R, Meaning of "Construction", Information Circular IC78-4R3, Investment Tax Credit Rates, and IC78-4R3SR, Special Release – Investment Tax Credit Rates. |
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