T2038 (IND) : Investment Tax Credit (Individuals)

What’s in this article?

 

What is this?

Form T2038 is used to claim investment tax credits (ITC) for the year. You can claim an investment tax credit for investments or expenditures you made in the year for qualified property, qualified resource property, qualified scientific research and experimental development (SR&ED) expenditures, flow-through mining expenditures, apprenticeship job creation expenditures, or child care spaces expenditures. The investment tax credit is calculated on form T2038 based on the cost of the property you bought or the expenditures you made. Any ITC you earn in the year can be used to reduce your federal tax.

In addition, you can use form T2038 to claim a carryforward, request a carryback, claim a refund for an ITC earned, or if you have a recapture of ITC on a SR&ED expenditure or child care expenditure. You can carry back investment tax credits you earned for up to three years or carry these forward up to 20 years. You may also be able to claim a refund on up to 40% of any unused credits. Click this link for information on claiming a refund on unused ITCs.

You must file form T2038 within no more than 12 months after the income tax return filing due date for the year in which you purchased the property or made the expenditure.

 

Am I eligible?

You must complete form T2038, if you are eligible to claim an investment tax credit.

Canada Revenue Agency says…

You may be eligible to claim an investment tax credit (ITC) if any of the following applies:

  • you bought certain new buildings, machinery, or equipment and they were used in certain areas of Canada in qualifying activities such as farming, fishing, logging, manufacturing, or processing (for more information, go to Atlantic investment tax credit);
  • you have done work that qualifies for scientific research and experimental development (SR&ED) tax incentives (for more information, go to Claiming SR&ED tax incentives);
  • you employ an eligible apprentice for which you want to claim an Apprenticeship Job Creation Tax Credit (AJCTC);
  • you have unclaimed credits earned in the last 10 years;
  • you have received a T3 slip, showing an amount in box 41;
  • you have received a 2008 version of a T5013 slip, with an amount showing in box 107or a 2004 version of a T5013 slip, with an amount showing in boxes 38 or 138;
  • you have received a T5013 slip, with an amount showing in boxes 186 or 194;
  • you have received a T101 slip, with an amount showing in box 128;
  • you have a partnership financial statement that allocates to you an amount that qualifies for this credit;
  • you have an investment in a mining operation that allocates certain exploration expenditures to you;
  • you have created licensed child care spaces for the children of your employees.

Certain renounced Canadian exploration expenses qualify for the ITC. You can claim this credit if you received Form T101, Statement of Resource Expenses, or a T5013 slip, Statement of Partnership Income, with an amount in box 194.

 

Where do I claim this?

Follow these steps in H&R Block’s tax software to file your 2015 taxes:

  1. Click the PREPARE tab.
  2. Click the YOUR YEAR IN REVIEW icon. You will find yourself here:
  3. Click the checkbox labelled I had investments.
  4. Scroll to the bottom of the page and click Continue.
  5. Click the RRSPS AND INVESTMENTS icon. You will find yourself here:
  6. Under the INVESTMENT INCOME heading, click the checkbox labelled Investment tax credit for individuals (T2038).
  7. Click Continue.

When you arrive at the page for Investment tax credit for individuals (T2038), enter your information into the tax software.

 

Where can I learn more?