With respect to depreciation, taxpayers may claim depreciation expense (known as “capital cost allowance”) in accordance with prescribed government rates. Categories of assets are placed in a class and are then depreciated at the prescribed rates. For example, buildings are generally amortized at a 4% annual declining balance rate. Assets with a shorter useful life will have higher depreciation rates.
There is a myriad of federal and provincial tax credits available to corporations with the spirit of fostering economic growth and development, in a certain sector or region. Tax credits range from promoting IT and E-commerce business, the mining industry, the film and television industry, the financial industry, manufacturing and processing business, and to conducting research and development.
The research and development tax credit is one of the more prominent and generous incentive programs available which provides tax deductions and credits available to taxpayers for expenditures incurred for scientific research and experimental development (SR&ED) related to business carried on in Canada by the taxpayer.