If you invested in or paid for qualified property, scientific research and experimental development (SR&ED), mining exploration, apprenticeship jobs, or childcare spaces, you might be able to claim an investment tax credit (ITC) to lower your federal tax payable using form T2038.
There are a number of situations that make you eligible to claim an ITC, including:
- You bought a new building, machinery, or equipment and it was used in certain Canadian regions for qualifying farming, fishing, logging, manufacturing, or processing activities
- You have unclaimed credits that were earned in the last 10 years
- You’ve done work that qualifies for SR&ED tax incentives or
- You created a licensed childcare space for the children of your employees
Note: This list isn’t complete. For a full list, visit the Canada Revenue Agency's (CRA) website.
If you’d like, you can use the T2038 to carry your unused ITC back up to 3 years or forward up to 20 years, if you want to claim a refund on up to 40% of your unused credits, or if your credit on SR&ED or childcare expenses is recaptured.
For example, if you created a childcare space for the children of your employees and that space becomes unavailable or used for another purpose at any time within 5 years of the day it was created, the CRA will recapture the ITC for that space or property.
Important: Be sure to file your T2038 within 12 months of the income tax filing deadline of the year you purchased the property or paid the expense. If you don’t, you’ll need to complete form T1-ADJ, T1 Adjustment Request.
Where do I claim this?
Follow these steps in H&R Block’s tax software to file your 2016 taxes:
- On 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 INVESTMENT INCOME heading, select the checkbox labelled Investment tax credit for individuals (T2038), then click Continue.
- When you arrive at the page for the Investment tax credit for individuals, enter your information into the tax software.