Glossary
Investment Tax Credit (ITC)
An investment tax credit is a dollar-for-dollar reduction in the tax a corporation owes for making certain qualifying outlays, most notably research and development spending. Unlike a deduction that only trims taxable income, a credit cuts the tax bill directly, and unused amounts can usually be carried back or forward, with some portions even refunded in cash. The best-known example is the SR&ED credit, which rewards eligible Canadian innovation. Sorting out which expenditures qualify is where careful planning pays off.
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