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Government: Recent Strategic Tax Incentives

Tax Incentives: Recent Manufacturing R & D Film & Video Education Mining Federal

Summary of Strategic Tax Incentives announced in the last three Manitoba budgets.

For details about tax incentives, please visit the Manitoba Finance website

2011

  • Corporation Capital Tax: For all corporations except Crown Corporations and banks, the Corporation Capital Tax was eliminated effective January 1, 2011. (For manufacturing and processing corporations, Corporation Capital Tax was eliminated effective July 1, 2008.) 

  • Green Energy Equipment Tax Credit: The total Green Energy Equipment Tax Credit on geothermal heating systems is increased from 10% to 15%, effective for installations after April 12, 2011. The tax credit for Manitoba manufacturers of qualifying geothermal heat pumps will increase from 5% to 7.5%. The tax credit for purchasers of qualifying made-in-Manitoba geothermal heat pumps installed in Manitoba will also increase from 5% to 7.5%. The tax credit applicable to other eligible installation costs for geothermal heating systems installed in Manitoba will increase from 10% to 15%. The province is also examining broadening the 10% tax credit to made-in-Manitoba transformers and converters which are sold for use in Manitoba.

  • Manufacturing Investment Tax Credit: The Manufacturing Investment Tax Credit, scheduled to expire on December 31, 2011, will be extended to December 31, 2014.

  • Capital Tax Exemption for Small Banks:  Banks with taxable paid-up capital under $4 billion are exempted from the 3% capital tax, commencing with taxation years ending after April 12, 2011.

  • Cultural Industries Printing Tax Credit: A new 15% refundable credit is available for Manitoba printers based on eligible printing costs incurred and paid after April 12, 2011 and before 2015 in the production of eligible books. Qualifying costs are amounts invoiced by the Manitoba printer to the publisher of a book for printing, assembly and binding services performed in Manitoba.

  • Book Publishing Tax Credit: The Book Publishing Tax Credit, scheduled to expire on December 31, 2011, will be extended to December 31, 2014. The tax credit is also expanded to include non-refundable monetary advances and labour costs related to publishing an electronic or digital version of an eligible literary work, for eligible expenses incurred and paid after April 12, 2011. In addition, the bonus applied to Manitoba printing costs when an eligible book is printed on paper with a minimum of 30% recycled content is increased from 10% to 15%, for printing expenses incurred and paid by a publisher after April 12, 2011. The maximum tax credit claimable by a publisher is $100,000 per year.

  • Co-op Education and Apprenticeship Tax Credits Components of the Co-op Education and Apprenticeship Tax Credits scheduled to expire on December 31, 2011, will be extended to December 31, 2014. In addition, the province is examining ways to simplify the application process.

  • Mineral Exploration Tax Credit: The Mineral Exploration Tax Credit, scheduled to expire with respect to flow-through share agreements entered into after March 2012, will be extended to cover flow-through share agreements entered into before April 1, 2015.

  • Community Enterprise Development Tax Credit: The Community Enterprise Development Tax Credit, scheduled to expire on December 31, 2011, will be extended to December 31, 2014.

  • Odour Control Tax Credit: The Odour Control Tax Credit, scheduled to expire on December 31, 2011, will be extended to December 31, 2014.

  • Neighbourhoods Alive! Tax Credit This new 30% tax credit encourages corporations with a permanent establishment in Manitoba to support and work with charitable organizations to establish new social enterprises in Manitoba. Subject to certain conditions, corporate donations provided in the year prior to the establishment of the social enterprise and during the first three years of the social enterprise are eligible for the tax credit. The maximum tax credit a corporation can earn in a given year is $15,000.

2010

  • Corporation Income Tax: Effective December 1, 2010, corporations eligible for the federal small business tax rate reduction pay 0% on the first $400,000 of corporate taxable income allocated to Manitoba.

  • Research and Development Tax Credit: The tax credit is fully refundable for eligible R&D carried on in Manitoba under an eligible contract with a qualifying research institute in Manitoba. Budget 2010 extends refundability of this tax credit to in-house R&D expenditures (i.e. R&D not undertaken under contract with an institute in Manitoba) as follows:

    • starting with 2011, one-quarter of the credit for in-house R&D will be refundable;

    • starting with 2012, one-half of the credit for in-house R&D will be refundable.

  • Co-op Education and Apprenticeship Tax Credits: Starting in 2011, the tax credit is broadened to include employers who hire high-school and post-secondary Level 1 and 2 apprentices, but who are not eligible for the federal Apprenticeship Job Creation Tax Credit. This includes tax-exempt employers as well as taxable employers of non-Red-Seal apprentices. The Manitoba tax credit will be equal to 10% of net wages and salaries paid to an apprentice, up to a maximum $2,000 credit.

  • Co-operative Development Tax Credit: A tax credit is introduced for co-operatives that make financial contributions toward co-operative development in Manitoba. Contributions to a fund managed by the Manitoba Cooperative Association will be used for the provision of technical assistance, the co-ordination of existing supports and services, and the provision of small grants and strategic investments. Contributions made after September 2010 will be eligible for the tax credit.

  • Film and Video Production Tax Credit: The Manitoba Film and Video Production Tax Credit, which was set to expire March 1, 2011, is extended to March 1, 2014. Starting with productions which commence principal photography after March 2010, production companies will be able to elect to claim either the maximum 65% film tax credit based on eligible labour costs or a new 30% tax credit based on production costs incurred and paid for labour, goods and services provided in Manitoba that are directly attributable to the production of an eligible film.

  • Small Business Venture Capital Tax Credit: The Community Enterprise Investment Tax Credit, which was set to expire December 31, 2010, is extended to December 31, 2013 and it is renamed the Small Business Venture Capital Tax Credit. The program will be amended to prioritize economic development in accordance with Provincial objectives. Additionally, administrative changes will be made that correspond to other tax credit programs.

  • Interactive Digital Media Tax Credit: The Interactive Digital Media Tax Credit, which was set to expire December 31, 2010, is extended to December 31, 2013. The following changes are also proposed, effective for certificates of eligibility and tax credit certificates issued after March 23, 2010:

    • tax credit certificates can be issued on a taxation-year basis instead of at the end of a project;

    • repaid or repayable government assistance will no longer reduce eligible labour costs; and

    • where a government or public authority is the purchaser of an interactive digital media product, the amount paid by the purchaser and the amount of the Interactive Digital Media Tax Credit cannot exceed 100% of the project’s costs.

  • Tuition Fee Income Tax Rebate Advance Beginning in 2010, students resident in Manitoba and attending a post-secondary institution can claim a Tuition Fee Income Tax Rebate Advance in the form of a refundable 5% tax credit on tuition and ancillary fees paid after August 31, 2010. The tax credit is claimable by a student even if the tuition and education amount is transferred to a parent or spouse. There is an annual cap of $250 in 2010, and of $500 in following years, and a lifetime cap of $5,000 under the Advance. Amounts claimed as an Advance will reduce the lifetime maximum of $25,000 under the Rebate following graduation. Where an individual is claiming a Rebate in a given year, they are not eligible to claim the Advance.

2009

  • Corporation Income Tax: The general rate is reduced to 12% in 2009, with a reduction to 11%* planned for the future. The small business tax, already the lowest in Canada at 1%, will be eliminated, December 2010.

  • Accelerated Capital Cost Allowance (CCA) Rates:  The 50% accelerated CCA rate on manufacturing machinery and equipment is extended to property acquired in 2010 and 2011. Computer hardware and systems software acquired in 2009 and 2010 qualify for 100% CCA rate.

  • Mining tax: The mining tax rate is reduced from 18% to 17% effective July 1, 2009. In addition, a 15% rate will apply when operator profits are between $55 million and $100 million and a 10% rate will apply when operator profits are under $50 million. Transitional tax rates will apply when operator profits are between $50 million and $55 million or between $100 million and $105 million.

  • Fuel Tax - Aviation Fuel: Effective July 1, 2009, the aviation fuel tax rate for domestic cargo flights is reduced from 3.2 cents to 1.5 cents per litre and the fuel tax exemption for international cargo flights is expanded, effective July 1, 2009, to include direct and indirect cargo flights to and from the United States. The exemption will be provided through a rebate program.

  • Co-op Education & Apprenticeship Tax Credits:  A new refundable credit is now available to employers that hire advanced-level apprentices. The new credit equals 5% of wages paid to the advanced-level apprentice for work performed in Manitoba, net of other government assistance. The maximum credit for one apprentice completing one level is $2,500. There is no limit on the number of apprentices in respect of whom the employer can apply.

  • Research & Development Tax Credit:The credit will become refundable after 2009 for qualifying Manitoba corporations that conduct eligible R&D with research institutes in Manitoba on new technologies in biotechnology, medical science, the environment, agriculture, information, communications and computers, as prescribed. Eligible R&D expenses must be incurred in Manitoba under an eligible contract with a qualifying research institute, which will include post-secondary institutions and research institutes in Manitoba, as prescribed.

  • Green Energy Equipment Tax Credit:The credit is extended to solar thermal energy systems purchased for use in Manitoba starting in 2009.

  • Mineral Exploration Tax Credit The rate of this credit is increased and the program is extended to cover share agreements entered into before April 1, 2012. The credit was introduced in Budget 2002 as a 10% non-refundable personal income tax credit earned when a Manitoba taxpayer purchases flow-through shares in qualifying exploration companies to finance Manitoba mineral exploration projects. The credit will increase in two steps: to 20% on flow-through share agreements entered into from April 1, 2009 until March 31, 2010, and to 30% on flow-through share agreements entered into from April 1, 2010 until March 31, 2012.

  • The Community Enterprise Investment Tax Credit (CEITC): The maximum annual approval limit will increase from to $33,000,000 from $16,667,000, commencing in 2009. The credit is a non-refundable income tax credit equal to 30% on a maximum $450,000 investment in equity capital. It is available to both individual and corporate investors who acquire equity capital in emerging enterprises that require larger amounts of capital than community ownership can provide. The credit is available on eligible securities acquired after 2007 and before 2011.

  • Community Enterprise Development Tax Credit:  The maximum value of issuable shares that a business can apply for under this program is doubled from $500,000 to $1,000,000, commencing in 2009. The credit encourages Manitobans to invest in community-based enterprise development projects. This non-refundable personal income tax credit is equal to 30% on a maximum $30,000 investment in equity capital.

* Subject to requirements of Balanced Budget legislation

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