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Part II .

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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 (effective January 1 , 2015), N.S. Reg. 137/2016

amended to O.I.C. 2024-185 (effective November 9, 2023), N.S. Reg. 109/2024

Table of Contents

Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.

Click here to go to the text of the regulations .

Citation

Definitions

Approved projects

Eligible corporations

Eligibility certificate

Revocation of eligibility certificate

Reinstatement of eligibility certificate

Application for tax-credit certificate

Qualified property acquired in respect of an approved project

Records kept by eligible corporation

Citation

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

Definitions

(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.

(3) For the purposes of subclause 49A(1)(d)(ii) of the Act, property is considered

qualified property if it meets all of the criteria set out in the definition of “qualified

property” in subsection 127(9) of the Federal Act, except that the following is to be

substituted for paragraph (

c) of that definition:

(

c) to be used by the taxpayer in the Province primarily for the purpose of

(

i) manufacturing aerospace products and parts to be used in space

transportation, falling under NAICS Canada industry 33641

(aerospace product and parts manufacturing), or

(ii) transporting freight, including satellites, by space vehicle into orbit,

falling under NAICS Canada industry 481214 (non-scheduled

chartered air transportation).

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

(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

(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

(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

(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

(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

(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.

Legislative History

Reference Tables

Capital Investment Tax Credit Regulations

N.S. Reg.

137/2016

Income Tax Act

Note: The

information in these tables does not form part of the regulations and is

compiled by the Office of the Registrar of Regulations for reference only.

Source Law

The current consolidation of the Capital Investment Tax Credit Regulations made

under the Income Tax Act includes all of the following regulations:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

137/2016

Jan 1, 2015

date specified

Jul 22, 2016

109/2024

Nov 9, 2023

date specified

Jun 14, 2024

The following regulations are not

yet in force and are not included in the current consolidation:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

*See subsection 3(6) of the Regulations Act for

rules about in force dates of regulations.

Amendments by Provision

ad. = added

am. = amended

fc. = fee change

ra. = reassigned

rep. = repealed

rs . = repealed and substituted

Provision affected

How affected

2(3) ...................................................

ad. 109/2024

Note that changes to headings are not

included in the above table.

Editorial Notes and Corrections

Note

Effective

date

Repealed and Superseded

N.S.

Regulation

Title

In force

date

Repealed

date

Note: Only

regulations that are specifically repealed and replaced appear in this

table. It may not reflect the entire

history of regulations on this subject matter.