Eligibility for the Air Quality Improvement Tax Credit 

• Business Type: The tax credit is available to small businesses, including both unincorporated (sole proprietors) and incorporated entities (Canadian controlled private corporations). 
• Taxable Capital Limit: For incorporated businesses, the taxable capital should be less than $15 million in the preceding year. 
• Partnerships: Partnerships are eligible, but each partner can only claim a portion of the credit corresponding to their share in the partnership. 

Qualifying Expenses 

The tax credit encourages investments in equipment aimed at increasing outdoor air intake, enhancing air cleaning, or improving air filtration. Eligible expenses include: 

• Purchasing, installing, upgrading, or converting HVAC systems. 
• Acquiring HEPA air filter devices. 
• The equipment must meet certain efficacy standards. 

Duration of the Tax Credit 

• The eligible expenses must be incurred between September 1, 2021, and December 31, 2022. 
• Expenses from September 1 to December 31, 2021, cannot be claimed in the 2021 tax return but in the 2022 tax year. 
• For incorporated businesses with a non-December 31 year-end, the claiming period varies. 

How the Tax Credit Works 

• The tax credit amounts to 25% of the eligible expenses. 
• For example, if you spend $10,000 on qualifying improvements, you can claim $2,500 as a tax credit, reducing your income tax owed. 

Claiming the Tax Credit 

• To claim the tax credit, complete the Air Quality Improvement Tax Credit Schedule 65 form. 
• Keep a record of all eligible expenses for potential review by the Canada Revenue Agency 

Additional Assistance 

• Your accountant can assist in claiming these expenses. 

This tax credit is an opportunity for small businesses, especially medical offices, to improve air quality while receiving financial benefits. However, it’s important to consult with financial and tax professionals for tailored advice.