If you need a little help buying into a portion of a business, you might be able to take advantage of the Manitoba employee share purchase tax credit.
By purchasing a registered employee share ownership plan (ESOP) from your employer, you might qualify for a 45% tax credit. The same is true if you were to buy these shares with your RRSP or TFSA account. The first $27,000 of the credits you earn are refundable - anything over that amount (up to $67,500 per year) can be claimed as a non-refundable credit. Unused credits can be carried forward 10 years or carried back 3 years, but not to a tax year before 2014.
Your T1256-2: Manitoba employee share purchase tax credit form will help you calculate the refundable and non-refundable portions of this tax credit. You’ll also be able to calculate how much of the credit you can carry forward to use in the future.
If you’re filing a paper return, you’ll need to attach your T1256-2 and ESOP receipt to your return. If you’re preparing your return online, make sure you keep all your supporting documents just in case the Canada Revenue Agency (CRA) asks to see them later.
Where do I claim this?
Follow these steps in H&R Block’s tax software to file your 2016 taxes:
Before you begin, make sure that you told us that you lived in MANITOBA on December 31, 2016.
- Under the PREPARE tab, click the LET'S TALK ABOUT 2016 icon.
- Select the checkbox labelled I had investments and/or investment income, or I bought and/or sold property.
- Click the PENSION PLANS AND INVESTMENTS icon. You'll find yourself here:
- Under the RESOURCE INCOME AND CREDITS heading, select the checkbox labelled Manitoba employee share purchase tax credit (T1256-2), then click Continue.
- When you arrive at the page for Manitoba employee share purchase tax credit, enter your information into the tax software.