New Small Business Regulations
made under Section 42 of the
Income Tax Act
R.S.N.S. 1989, c. 217
O.I.C. 2002-322 (June 28, 2002), N.S. Reg. 87/2002
amended to O.I.C. 2022-227 (effective September 13, 2022), N.S. Reg. 212/2022
Table of Contents
Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.
Click here to go to the text of the regulations.
Citation
Definition
Application of regulations
Additional terms and conditions of eligibility for deduction under Section 42 of the Act
Order in which deduction to be taken under Section 42 of the Act
Time limit for application for certificate of eligibility
Citation
1 These regulations may be cited as the New Small Business Regulations.
Definition
2 In these regulations, “Act” means the Income Tax Act.
Application of regulations
3 These regulations apply to a taxation year of a corporation ending on or after March 30,
2001.
Additional terms and conditions of eligibility for deduction under Section 42 of the Act
4 In addition to the eligibility requirements set out in Section 42 of the Act, a corporation
is not eligible for a deduction pursuant to subsection 42(4) of the Act unless the
corporation employs at least 2 individuals, including 1 or more individuals who meet all
of the following conditions:
(a) they are not related to a specified shareholder of the Corporation;
(b) their total paid hours of employment are not less than 1300 in a 12-month
period, or an equivalent amount pro-rated for a short taxation year.
Order in which deduction to be taken under Section 42 of the Act
5 (1) Where a corporation is eligible in a taxation year for a deduction pursuant to
subsection 42(4) of the Act, the corporation shall not calculate the deduction or
reduce its tax payable by the amount of the deduction until the corporation has
made all other allowable deductions to tax payable to which it is entitled pursuant
to the Act.
(2) For greater certainty, all other allowable deductions to tax payable that are referred
to in subsection (1) include the deductions allowed pursuant to Sections 41, 47 and
49 of the Act.
Time limit for application for certificate of eligibility
6 For the purposes of subsection 42(12) of the Act, a corporation is not eligible for a
certificate of eligibility unless the corporation applies to the Minister within the 3 years
immediately following the taxation year for which the deduction is to be claimed.
The following regulations are not
yet in force and are not included in the current consolidation: