This consolidation is unofficial and is for reference only.  For the official version of the regulations, consult the original documents on file with the Registry of Regulations, or refer to the Royal Gazette Part II.
Regulations are amended frequently.  Please check the list of Regulations by Act to see if there are any recent amendments to these regulations filed with our office that are not yet included in this consolidation.
Although every effort has been made to ensure the accuracy of this electronic version, the Registry of Regulations assumes no responsibility for any discrepancies that may have resulted from reformatting.
This electronic version is copyright © 2016, Province of Nova Scotia, all rights reserved.  It is for your personal use and may not be copied for the purposes of resale in this or any other form.


Capital Investment Tax Credit Regulations

made under Section 49A of the

Income Tax Act

R.S.N.S. 1989, c. 217

O.I.C. 2016-168 (July 4, 2016, effective January 1, 2015), N.S. Reg. 137/2016



Citation

1     These regulations may be cited as the Capital Investment Tax Credit Regulations.


Definitions

2     (1)    In these regulations,

 

“Act” means the Income Tax Act;

 

“available for use” means available for use as determined under either of the following:

 

                         (i)     subsection 13(27) of the Federal Act, without reference to paragraph (c),

 

                         (ii)    subsection 13(28) of the Federal Act, without reference to paragraph (d);

 

“business plan”, in reference to a corporation, means the business plan submitted with the corporation’s application for an eligibility certificate under clause 4(2)(b);

 

“effective date” means the date identified in a business plan as the earliest date that qualified property in respect of the project is, or is expected to be, acquired;

 

“eligibility certificate” means a certificate issued under Section 5 in respect of an eligible corporation that is determined to be eligible to apply for a tax-credit certificate;

 

“NAICS Canada” means the North American Industry Classification System (NAICS) Canada, as revised in 2012, published by Statistics Canada and developed by the federal government and the governments of the United States of America and Mexico for use in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the Canadian business economy;

 

“project” means a single project of a corporation;

 

“revenue from government sources” means revenue received from a federal, provincial or municipal government, including a crown corporation, agency, board or tribunal, whether or not received under a contract for services;

 

“tax-credit certificate” means a tax-credit certificate issued under subsection 49A(6) of the Act.

 

       (2)    A reference in these regulations to the Minister of Finance and Treasury Board of the Province includes a person designated by the Minister of Finance and Treasury Board of the Province as referred to in subsections 49A(5), (6) and (12) of the Act.


Approved projects

3     A project that satisfies all of the following conditions is an approved project:

 

                (a)    the aggregate of all amounts, each of which is the capital cost of qualified property in respect of the project is, or is expected to be, not less than the following:

 

                         (i)     $5 million over a period of 24 months from the effective date,

 

                         (ii)    $7.5 million over a period of 36 months from the effective date,

 

                         (iii)   $10 million over a period of 48 months from the effective date,

 

                         (iv)   $15 million over a period of 60 months from the effective date;

 

                (b)    less than 50% of the revenue from the project will be revenue from government sources;

 

                (c)    the project is, in the opinion of the Minister of Finance and Treasury Board of the Province, consistent with the Province’s priority of achieving sustained economic development and growth through investments in significant capital projects such as new technologies or expansions that result in gains in innovation, productivity or competitiveness as well as increased international trade.


Eligible corporations

4     A corporation that satisfies all of the following conditions is an eligible corporation:

 

                (a)    it is incorporated under the laws of Canada or a province of Canada and is a taxable Canadian corporation;

 

                (b)    it has a permanent establishment in the Province;

 

                (c)    its principal activity does not fall within 1 of the following classes under NAICS Canada:

 

                         (i)     industry group 2111 (oil and gas extraction),

 

                         (ii)    industry group 2212 (natural gas distribution),

 

                         (iii)   sector 23 (construction),

 

                         (iv)   industry group 3273 (cement and concrete product mixing),

 

                         (v)    industry 32712 (clay building material and refractory manufacturing),

 

                         (vi)   industry 32412 (asphalt paving, roofing and saturated materials manufacturing),

 

                         (vii)  sector 44–45 (retail trade),

 

                         (viii) industry 323113 (commercial screen printing),

 

                         (ix)   industry 323114 (quick printing),

 

                         (x)    industry 323115 (digital printing).


Eligibility certificate

5     (1)    A corporation must apply for and receive an eligibility certificate before applying for a tax-credit certificate.

 

       (2)    An application for an eligibility certificate must be in a form acceptable to the Minister of Finance and Treasury Board of the Province, and include all of the following:

 

                (a)    proof that the corporation is an eligible corporation and that its corporate registration status is in good standing;

 

                (b)    a business plan containing, at a minimum, all of the following information:

 

                         (i)     projected financial statements for the corporation for the taxation years covering the duration of the project,

 

                         (ii)    financial statements for the corporation’s preceding taxation year,

 

                         (iii)   a description of the project’s expected outcomes, including the impact on the economic development of the Province,

 

                         (iv)   a list of each qualified property that will be acquired in respect of the project, including:

 

                                  (A)   its estimated capital cost,

 

                                  (B)   the year it will be purchased, and

 

                                  (C)   the year it will be available for use,

 

                         (v)    a statement outlining how the qualified property is necessary to achieve the project’s expected outcomes;

 

                (c)    a statement signed by an authorized officer of the corporation giving consent on behalf of the corporation to the Minister to publish all of the following information:

 

                         (i)     the name of the corporation,

 

                         (ii)    the amount of the tax credit applied for,

 

                         (iii)   the amount of the tax credit received;

 

                (d)    any information that the Minister requires in order to determine any of the following:

 

                         (i)     that the corporation is an eligible corporation,

 

                         (ii)    that the project is an approved project,

 

                         (iii)   that the corporation will be entitled to receive a tax-credit certificate in accordance with Section 8.

 

       (3)    The Minister of Finance and Treasury Board of the Province must issue an eligibility certificate to an eligible corporation if they are satisfied, based on the information provided by the corporation, and any other information available to them, that the corporation will be entitled to receive a tax-credit certificate in accordance with Section 8.

 

       (4)    The decision of the Minister of Finance and Treasury Board of the Province to issue or refuse to issue an eligibility certificate under subsection (3) is final.


Revocation of eligibility certificate

6     (1)    An eligibility certificate is automatically revoked if a project fails to meet any of the capital cost conditions in clause 3(a).

 

       (2)    The Minister of Finance and Treasury Board of the Province may, at any time after an eligibility certificate has been issued, revoke the eligibility certificate in any of the following circumstances:

 

                (a)    the corporation does not acquire the qualified property or have it available for use in accordance with the timeline set out in their business plan;

 

                (b)    in the opinion of the Minister of Finance and Treasury Board of the Province, the corporation’s total expenditures on qualified property in respect of the project are no longer expected to meet the one of the capital cost conditions in clause 3(a);

 

                (c)    in the opinion of the Minister of Finance and Treasury Board of the Province, the corporation has not complied with any provision of the Act or these regulations or the spirit and intent of the Act or these regulations;

 

                (d)    the Minister of Finance and Treasury Board of the Province determines that the eligibility certificate was issued based on information or documentation that is false or misleading, or has materially changed.

 

       (3)    An eligibility certificate revoked under this Section is void ab initio.


Reinstatement of eligibility certificate

7     (1)    A corporation whose eligibility certificate is revoked under subsection 6(1) may apply to have the certificate reinstated.

 

       (2)    The Minister of Finance and Treasury Board of the Province may reinstate a corporation’s eligibility certificate if the corporation demonstrates, to the satisfaction of the Minister of Finance and Treasury Board of the Province, that there were circumstances beyond the corporation’s control that caused the project to fail to meet the capital cost conditions in clause 3(a).


Application for tax-credit certificate

8     (1)    An application for a tax-credit certificate for a taxation year must be made no later than 18 months after the end of the taxation year in which the qualified property in respect of which the tax-credit certificate is sought was acquired by the corporation.

 

       (2)    An application for a tax-credit certificate for a taxation year must be in a form acceptable to the Minister of Finance and Treasury Board of the Province, and include any information and records the Minister of Finance and Treasury Board of the Province requires to determine whether the criteria set out in the Act and regulations for issuing the tax-credit certificate are met, including all of the following:

 

                (a)    a copy of the corporation’s eligibility certificate for the approved project;

 

                (b)    the corporation’s T2 corporate tax return, including Schedule 31, and financial statements for the taxation year immediately preceding the taxation year for which the tax-credit certificate is sought;

 

                (c)    a draft of the corporation’s Schedule 31 to their T2 corporate tax return for the taxation year, with a statement identifying which qualified property shown on the schedule was acquired in respect of the approved project, and reconciling the acquisition of the qualified property to its business plan;

 

                (d)    proof of the capital cost of each qualified property shown on the corporation’s draft Schedule 31 to their T2 corporate tax return for the taxation year;

 

                (e)    a statement showing the government assistance received, or expected to be received, by the corporation that may reasonably be considered to relate to the acquisition of the qualified property;

 

                (f)    a status report for the corporation’s approved project with an explanation for any deviation from its business plan.


Qualified property acquired in respect of an approved project

9     (1)    A qualified property acquired by a corporation is acquired in respect of an approved project if it meets all of the following criteria:

 

                (a)    it is identified by property type and cost in the business plan;

 

                (b)    it is acquired and became available for use in the taxation year identified in the business plan;

 

                (c)    its acquisition is necessary to achieve the outcomes identified in the business plan.

 

       (2)    A qualified property acquired by a corporation is considered to be acquired in respect of an approved project, despite subsection (1), if any of the following circumstances apply, and the Minister of Finance and Treasury Board of the Province is of the opinion that the difference is immaterial:

 

                (a)    the property differs from the description given in the business plan;

 

                (b)    the property was acquired or became available for use in a different year than was identified in the business plan.


Records kept by eligible corporation

10   (1)    An eligible corporation must keep records in the form required by the Minister of Finance and Treasury Board of the Province, and containing any information that the Minister of Finance and Treasury Board of the Province considers necessary to determine that the eligible corporation is complying with the Act and these regulations.

 

       (2)    An eligible corporation must keep the records required by subsection (1) at its head office or at another place approved by the Minister of Finance and Treasury Board of the Province.