Atlantic investment tax credit

The Atlantic Investment Tax Credit is based on specified percentages available for certain investments in new buildings, and new machinery and equipment used in the Atlantic Canada and Atlantic Region.

Eligible investments

As of March 29, 2012, this credit supports investments in qualified property for use in the following sectors:

  • farming
  • fishing
  • logging
  • manufacturing and processing
  • storing grain
  • harvesting peat
  • prescribed new energy generation and conservation property
  • the production or processing of electrical energy or steam in certain areas

Currently, this credit also supports some investments in qualified resource property for use in the oil and gas, and mining sector in the Atlantic Region. Starting on March 29, 2012, Atlantic Investment Tax Credits for use in oil and gas, and mining activities will be phased out based on specified percentages over a four-year period. A transitional relief rate will be provided in recognition of the long timelines involved in some oil and gas, and mining projects.

The credit for qualified property acquired for use in other activities will still be available.

Specified percentages

Total investments and expenditures in newly acquired assets are multiplied by a specified percentage to calculate the refundable credits for the current year.

Investments in newly acquired qualified property that will be used mainly in Atlantic Canada and Atlantic Region are calculated using a specified percentage of 10%.

Investments in newly acquired qualified resource property that will be used mainly in Atlantic Canada are calculated using a specified percentage based on when they were acquired.

If the qualified resource property was acquired:

  • after 2013, and before 2016, the specified percentage is 5%
  • after 2015, the specified percentage is 0%
  • after 2013, before 2017 and is eligible for the transitional relief rate, the specified percentage is 10%

Definitions

Qualified property

For the purposes of the Atlantic Investment Tax Credit, this term means a category of new assets acquired primarily for use in the Atlantic Canada and Atlantic Region that are mainly used for farming or fishing, logging, manufacturing and processing, storing grain, or harvesting peat.

Property used mainly in Atlantic Canada and Atlantic Region for oil and gas, and mining activities is considered qualified property only if acquired by the taxpayer before March 29, 2012. Qualified property includes new buildings, and new machinery and new equipment (prescribed in Income Tax Regulation 4600), and if acquired by the taxpayer after March 28, 2012, new energy generation and conservation property (prescribed in Income Tax Regulation 4600). Qualified property can also be used primarily to produce or process electrical energy or steam in a prescribed area (as described in Income Tax Regulation 4610).

Qualified resource property

For the purpose of the Atlantic Investment Tax Credit, this term means a category of new property acquired primarily for use in the Atlantic Canada and Atlantic Region that is used primarily for oil and gas, and mining activities, if acquired by the taxpayer after March 28, 2012, and before January 1, 2016. This category of investments will be phased out of the Atlantic Investment Tax Credit based on specified percentages and a transitional relief rate. Qualified resource property includes new buildings, and new machinery and equipment (prescribed in Income Tax Regulation 4600).

Transitional relief rate

A transitional relief rate of 10% may apply to qualified resource property acquired after 2013 and before 2017, if the property is acquired under a written agreement entered into before March 29, 2012, or the property is acquired as part of a phase of a project where the construction or the engineering and design work for the construction started before March 29, 2012. For more information on qualified resource property, see subsection 127(9) of the Income Tax Act.

Phase

A "phase" of a project means a discrete expansion in the extraction, processing or production capacity of the project of a taxpayer beyond a capacity level that was attained before March 29, 2012. The taxpayer must also demonstrate that the intention to expand the project existed immediately before that date.

Atlantic Canada and Atlantic Region

For the purposes of the Atlantic Investment Tax Credit these expressions include the Gaspé Peninsula and the provinces of Newfoundland and Labrador, Prince Edward Island, Nova Scotia, and New Brunswick, as well as their respective offshore regions (prescribed in Income Tax Regulation 4609).

Gaspé Peninsula

For the purposes of the Atlantic Investment Tax Credit this expression means that portion of the Gaspé region of the province of Quebec that extends to the western border of Kamouraska County and includes the Magdalen Islands (prescribed in subsection 127(9) of the Income Tax Act).

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