Newfoundland and Labrador's Bill 54, which includes the new Green Technology Tax Credit and Manufacturing and Processing Investment Tax Credit, received first reading on May 11, 2022. These measures were announced in Newfoundland and Labrador's 2022 budget on April 7, 2022.
The corporate income tax measures included in this bill are considered substantively enacted for IFRS and Accounting Standards for Private Enterprise (ASPE) purposes on May 11, 2022, the date the bill received first reading (as Newfoundland has a majority government). The corporate income tax measures are not considered enacted for U.S. GAAP purposes until the date the bill receives Royal Assent.
Corporate income tax measures
Green Technology Tax Credit
Bill 54 includes the Green Technology Tax Credit, which provides a 20% tax credit on certain capital costs for eligible Canadian-controlled private corporations. The maximum credit is $1 million annually and must be shared among associated corporations. This tax credit applies to investments in equipment included in capital cost allowance classes 43.1 or 43.2, such as equipment for energy conservation, clean energy generation and efficient use of fossil fuels. To qualify for the credit, the property must be located in the province and acquired for and used in a business operating in the province. Note that this tax credit may be up to 40% refundable.
Manufacturing and Processing Investment Tax Credit
The bill also includes the Manufacturing and Processing Investment Tax Credit, which provides a 10% tax credit on investments in certain capital property. The tax credit applies to eligible capital costs for buildings, machinery and equipment within the manufacturing, fishery, farming and forestry sectors in certain circumstances. To qualify for the credit, the property must be located in the province and acquired for and used in a business operating in the province. Note that this credit may be up to 40% refundable for eligible Canadian-controlled private corporations.
For more information, contact your KPMG adviser.
Information is current to May 16, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500