Grants, subsidies, or other incentives or inducements

You may get a grant or subsidy from a government or a government agency to buy depreciable property. When this happens, subtract the amount of the grant from the property's capital cost. Do this before you enter the capital cost in column 3 of Area B or Area C of Form T2125, Statement of Business or Professional Activities. For instructions on completing Form T2125, see Calculation of capital cost allowance claim (Area A).

You may have paid GST/HST on some of the depreciable property you acquired for your business. If so, you may have also received an input tax credit from us.

The input tax credit is government assistance. Therefore, subtract it from the property's capital cost. Do this before you enter the capital cost in column 3 of Area B or Area C, whichever applies, of Form T2125. If you receive an input tax credit for a passenger vehicle you use in your business, use one of these methods:

• For a passenger vehicle you use 90% or more for your business, subtract the amount of the credit from the vehicle's cost before you enter its capital cost in column 3 of Area C of Form T2125.
• For a passenger vehicle you use less than 90% for your business, do not make an adjustment in the current tax year. In the next tax year, subtract the amount of the credit from your beginning undepreciated capital cost (UCC).

You may get an incentive from a non-government agency to buy depreciable property. If this happens, you can either include the amount in income or subtract the amount from the capital cost of the property.

Forms and publications

• Guide T4002, Business and Professional Income
• Form T2125, Statement of Business or Professional Activities
• Interpretation Bulletin IT-273R2, Government Assistance - General Comments

Related topics

• Calculation of capital cost allowance claim (Area A)
• Input tax credits