tax alert – alberta alerts... · the capital investment tax credit (citc) is intended to ensure...
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Tax Alert – Alberta
New Tax Credits for a Competitive Alberta
Alberta Minister of Economic Development and Trade Deron Bilous introduced
legislation on Tuesday, November 8, 2016, to create two new provincial tax
credits worth a total of $165 million over three years.
The Capital Investment Tax Credit (CITC) is intended to ensure Alberta is
competitive for large capital investments, and the Alberta Investor Tax Credit
(AITC) is meant to bring Alberta investors and small businesses together.
The CITC offers a non-refundable tax credit of up to $5 million to Alberta
companies involved in manufacturing, processing and tourism infrastructure. The
budget for the CITC is $70 million over two years, with the credit provided on a
competitive basis to companies making eligible capital investments in qualified
property of $1 million or more.
The maximum amount of a corporation’s tax credit is equal to 10% of the capital
cost of each item of qualified property acquired in respect of an approved
investment plan. The approved investment plan will be a document that is
submitted to the Alberta government and must include an economic impact
assessment. Approval of the investment plan will be a prerequisite to receiving
the tax credit.
The amount of the tax credit is calculated as follows:
(The lesser of A or B) multiplied by C; where
A is 10%,
B is 30% minus the percentage of the capital cost of the propertyreceived by the corporation as government assistance, and
C is the capital cost of the eligible capital property
TAX ALERT - ALBERTA
The AITC has three components: Venture Capital Corporation Tax Credits;
Community Economic Development Corporation Tax Credits; and Eligible Business
Corporation Investor Tax Credits.
An eligible business corporation that in any calendar year has raised additional
equity capital can apply to the Minister for a tax credit certificate. This certificate
will entitle each eligible investor to an investor tax credit equal to 30% of the
amount received by the eligible business corporation for the shares that were
part of the additional equity capital and issued to the eligible investor. There will
be no tax credit entitlement where control of the eligible business corporation is
acquired by the eligible investor. Where there is a disposition of a share within 5
years in which a tax credit certificate was issued, the person may have to pay to
the Finance Minister an amount equal to any tax credit received.
The Venture Capital Corporation Tax Credits entitle shareholders to an investor
tax credit equal to 30% of the amount received by the venture capital corporation
from each of those shareholders. The Community Economic Development
Corporation Tax Credits has the same entitlement as that for venture capital
corporations.
Regulations will be introduced that will set out the types of business activities
that will qualify for the credit, but the government has indicated that eligible
businesses will include:
Proprietary technology research, development and commercialization;
Interactive digital media development;
Video game post production;
Digital animation; and
Tourism.
For more details relating to these new tax credits, please contact an MNP tax
specialist in your region.
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