Enriched Investment Tax Credit
The Enriched Investment Tax Credit complements the existing PEI Corporate Investment Tax Credit of 10 per cent. The tax credit is applied to certain capital investments made by manufacturing and processing businesses.
Offered by Innovation PEI
Amount
25 per cent provincial corporate tax credit on costs associated with qualified manufacturing and processing equipment, rebated against future PEI corporate income taxes; combined non-repayable government funding cannot exceed 75 per cent of eligible costs
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Who can apply
To be an eligible applicant, a business must be located in Prince Edward Island and:
- be registered to do business and actively operating in Prince Edward Island;
- manufactures, processes, or develops goods or services primarily for export;
- operates within one of these strategic sectors:
- bioscience
- aerospace and defence
- advanced manufacturing and processing
- renewable energy and clean technology
- information and communications technology
- creative and cultural industries
- first-of-its-kind exportable goods or services in other sectors may be considered.
The project must provide economic benefit to the province of Prince Edward Island.
The Enriched Investment Tax Credit applies to companies participating in activities relating to manufacturing and processing (M & P) as applied by the Canada Revenue Agency. The term “manufacturing and processing activities” is not defined in the Income Tax Act of Canada (“Federal Act”), although certain activities are listed as specific exclusions.
Administrative guidance provided by the Canada Revenue Agency suggests that manufacturing normally involves the creation of something, or the shaping, stamping or forming of an object out of something, and that processing of goods refers to a technique of preparation, handling, or other activity designed to effect a physical or chemical change in an article or substance, other than natural growth. Canada Revenue Agency Income Tax Folio S4-F15-C1 provides information to help in determining whether “manufacturing and processing” applies to particular industries, and, within an industry, where M & P starts and stops.
Eligible investment for the 25% Enriched Investment Tax Credit is limited to qualified property intended for the manufacture or processing of products which:
- are intended to be sold primarily outside of Prince Edward Island;
- use advanced manufacturing and processing methods;
- exceed labour productivity standards established for industry sectors and geographic locations; and
- intend, where practical, to use products from Island suppliers.
About the funding
The Enriched Investment Tax Credit provides qualified applicants with a 25 per cent provincial corporate tax credit on costs associated with qualified manufacturing and processing equipment. The credit will be rebated against future Prince Edward Island corporate income taxes paid by the company.
The combined project funding from all non-repayable government sources cannot exceed 75 per cent of eligible costs.
The Enriched Investment Tax Credit may be claimed against PEI Corporate Income Taxes for any of the seven years following the year in which the qualified property was acquired.
Investments in qualified property to implement high-productivity applications with a strong export focus.
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Qualified Property means machinery or equipment as prescribed for the purposes of paragraph (b) of the definition “Qualified Property” in subsection 127(9) of the Federal Act (acquired by the Company after 1992).
In general, the property must not have been used or leased before it was acquired by the Company and will be used by the Company in Prince Edward Island primarily for the purpose of manufacturing or processing.
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| Investment Tax Credits (ITC) for Qualified Property | Tax Credit | The ITC rate for qualified property is 10% of the cost of acquiring qualified property (capital cost first reduced by any government or non-government assistance received or receivable) | Open |
| Accelerated Investment Incentive | Tax Credit | no fixed amount | Open |
| Air Quality Improvement Tax Credit | Tax Credit | no fixed amount | Open |
| Clean Technology Investment Tax Credits (ITC) | Tax Credit | no fixed amount | Open |
