A new refundable tax credit was introduced in Budget 2026. The tax credit is intended to incentivize capital investment in eligible manufacturing and processing property in British Columbia.
Expenditures incurred after March 31, 2026, and before April 1, 2036, to acquire new buildings, machinery and equipment primarily used for manufacturing and processing operations in British Columbia, Canada may be eligible for the credit.
Below are the highlights of the new British Columbia Manufacturing and Processing Investment Tax Credit:
Tax Credit Rate
- Maximum of $2 million eligible expenditures per year, after deducting any assistance received or receivable
- 15% refundable tax credit on eligible expenditures
- Rate decreases 2.5% per year for expenditures incurred after April 1, 2031
Eligible Corporations
- Must be a Canadian-controlled private corporation (CCPC)
- Must be a taxable corporation
- Must have a permanent establishment in British Columbia during the tax year
Eligible Expenditures
- Incurred after March 31, 2026 and before April 1, 2036
- Form part of the capital cost of eligible property
- Not claimed for the B.C. SR&ED tax credit
Eligible Property
- New non-residential buildings and components qualifying for accelerated CCA for manufacturing or processing
- New machinery and equipment included in Class 43
Action
If you are manufacturing or processing in B.C. and considering acquiring new buildings or equipment, you should perform an analysis of qualifications for this tax credit and consider access to other government incentives and tax credits. If you are eligible for this new BC Manufacturing and Processing Investment Tax Credit, you must submit your claim no later than 18 months after the end of the tax year in which the property you have purchased became available for use.
Reach out to your Welch LLP team if you have further questions or if you may be eligible for this credit.
