B.C. manufacturing and processing investment tax credit

Budget 2026 proposes a new refundable B.C. manufacturing and processing investment tax credit to support manufacturing and processing industries in B.C.

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 B.C. may be eligible for the credit.

The new tax credit is subject to the approval of the legislature.

On this page

• Who is eligible for the tax credit
• What you can claim for the tax credit
• How to claim the tax credit
• Situations where you must repay the tax credit
• Legislation

Who is eligible for the tax credit

Only qualifying corporations are eligible to claim the tax credit.

A qualifying corporation must:

• Be a Canadian-controlled private corporation (CCPC), and 
• Have a permanent establishment in B.C. at any time during the tax year

However, a corporation is not a qualifying corporation if it is:

• Exempt from B.C. income tax
• Controlled by an entity exempt from B.C. income tax
• An employee venture capital corporation
• A small business venture capital corporation

What you can claim for the tax credit

Eligible expenditures

You can claim expenditures that:

• Are incurred for an eligible property after March 31, 2026 and before April 1, 2036
• Form part of the capital cost of the eligible property
• Have not been claimed by the corporation under this credit in a previous tax year 
• Have not been claimed under the B.C. scientific research and experimental development tax credit in any tax year

Eligible expenditures must be reduced by government assistance or non-government assistance received or receivable by the corporation directly or indirectly through a related party in respect of the eligible property.

Eligible properties

An eligible property is any of the following:

• A building or a part of the building, for which the corporation has filed an election with their return for the accelerated capital cost allowance rate for non-residential buildings used for the manufacturing or processing of goods under the federal regulations. This includes any component parts of the building, such as:
  • Electric wiring
  • Plumbing
  • Sprinkler systems
  • Air-conditioning equipment
  • Heating equipment
  • Lighting fixtures
  • Elevators
  • Escalators
• Equipment included in Class 43
• Machinery included in Class 43
• A prescribed property

The eligible property must be:

• Acquired by the corporation after March 31, 2026, and before April 1, 2036
• Available for use by the corporation after March 31, 2026, and before April 1, 2036
• Used by any qualifying corporations primarily for manufacturing or processing goods for sale or lease in B.C.

The property is not an eligible property if it was:

• Used before it was acquired by the corporation
• Acquired for use or lease before it was acquired by the corporation
• A prescribed excluded property

How to claim the tax credit

You can claim the credit with your T2 Corporation Income Tax Return.

You can only claim the credit for the tax year during which the eligible property becomes available for use.

A qualifying corporation may claim for eligible expenditures, after deducting any assistance received or receivable, up to $2 million in relation to an eligible property.

An associated group of qualifying corporations must share the $2 million limit.

The annual rate for tax credit is 15% of the net eligible expenditures incurred for eligible properties after March 31, 2026, and before April 1, 2031. The annual credit rate for expenditures incurred on or after April 1, 2031 will be reduced by 2.5% per year until it reaches zero.

You must claim the credit no later than 18 months after the end of the tax year in which the property became available for use by the corporation.

Situations where you must repay the tax credit

A corporation that claimed the tax credit in the tax year or any of the five preceding tax years must repay the credit in the tax year during which any of the following events occur:

• The corporation disposed of the eligible property
• The corporation converted or changed the use of property in a way that makes the property ineligible
• The corporation removed the property from B.C.

Repayment amount

If the fair market value of the eligible property when the event occurs is not less than the capital cost of the property when the credit was claimed, the corporation must repay the full amount of the tax credit received for the eligible property.

If the fair market value of the eligible property when the event occurs is less than the capital cost of the property when the credit was claimed, the required repayment is the amount of credit received prorated by the fair market value of the property when the event occurs over the capital cost when the credit was claimed.

Legislation

The following legislation applies to the B.C. manufacturing and processing investment tax credit:

• Budget Measures Implementation Act, 2026