BILL NO. 257

(as introduced)

2nd Session, 60th General Assembly
Nova Scotia
58 Elizabeth II, 2009

Private Member's Bill

Manufacturing and Processing Employment Act

The Honourable Darrell Dexter
Cole Harbour

First Reading: May 1, 2009

(Explanatory Note)

Second Reading:

Third Reading:

This Bill amends the Income Tax Act to provide a 10% manufacturing and processing investment tax credit of which 75% is refundable.

1 This Act may be cited as the Manufacturing and Processing Employment Act.

2 The purpose of this Act is to create approximately two thousand two hundred secure jobs in the manufacturing and processing sectors in the Province.

3 Chapter 217 of the Revised Statutes, 1989, the Income Tax Act, is amended by adding immediately after Section 49 the following Section:

49A (1) In this Section,

(a) "capital cost" to the corporation has the meaning assigned by paragraph 127(11.1)(b) and (d) of the Federal Act and, for greater certainty, for the purpose of this subsection, "government assistance" as described in paragraph 127(11.1)(b) and (d) of the Federal Act does not include the investment tax credit determined under this Section;

(b) "investment tax credit" of a corporation at the end of a taxation year means the amount, if any, by which the total of

(i) an amount equal to 10% of the total of all amounts each of which is the capital cost to the corporation of a qualified property, and 75% of which is available as a refundable tax credit, determined without reference to subsection 13(7.1) of the Federal Act,

(ii) an amount equal to 10% of the total of all amounts each of which is the capital cost to the corporation of the qualified property acquired by it in any of the seven taxation years immediately following the year of acquisition determined without reference to subsection 13(7.1) of the Federal Act,

(iii) an amount equal to the total of all amounts each of which is an amount required by subsection (3), (4) or (5) to be added in computing its investment tax credit at the end of the year, and

(iv) the total of all amounts each of which is an amount required by subsection (3), (4) or (5) to be added in computing its investment tax credit at the end of any of seven taxation years immediately following the year,

exceeds 75% of the total of all amounts each of which is an amount required by subsection (3), (4) or (5) to be added in computing the may be claimed as a refund

(c) "manufacturing or processing" has the meaning assigned by the definition "manufacturing or processing" in subsection 125.1(3) of the Federal Act and includes qualified activities as defined by Federal Regulations made for the purpose of subsection 125.1(3) of the Federal Act;

(d) "qualified property" of a corporation means property acquired by the corporation that is qualified property within the meaning assigned by the definition under subsections 127(9) and (11) of the Federal Act, that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the corporation and that is

(i) to be used by the corporation in the Province primarily for the purpose of manufacturing or processing of goods for sale or lease, or

(ii) to be leased by the corporation to a lessee, other than a person exempt from tax under section 149 of the Federal Act, who can reasonably be expected to use the property in the Province primarily for the purpose of manufacturing or processing of goods for sale or lease,

but subclause (ii) does not apply in respect of property that is machinery and equipment unless the property is leased by the corporation in the ordinary course of carrying on a business in the Province and the principal business of the corporation is manufacturing property that it sells or leases.

(2) Subject to subsection (10), there may be deducted from the tax otherwise payable pursuant to this Act by a corporation for a taxation year an amount not exceeding the lesser of

(a) the corporation's investment tax credit at the end of the year; and

(b) the tax otherwise payable by the corporation pursuant to this Act for the year.

(3) Where, in a particular taxation year of a corporation that is a beneficiary under a trust, an amount would, if the trust were a corporation, be determined in respect of the trust under subclause (1)(b)(i) or (iii) for its taxation year ending in that particular taxation year, the portion of that amount that may, having regard to all circumstances, including the terms and conditions of the trust, reasonably be considered to be the corporation's share thereof is the amount required to be added in computing the investment tax credit of the corporation at the end of that particular taxation year.

(4) Where, in a particular taxation year of a corporation that is a member of a partnership, an amount would, if the partnership were a corporation, be determined in respect of the partnership under subclause (1)(b)(i) or (iii) for its taxation year ending in that particular taxation year, the portion of that amount that may reasonably be considered to be the corporation's share thereof is the amount required to be added in computing the investment tax credit of the corporation at the end of that particular taxation year.

(5) Where, in a particular taxation year of a corporation that is a member of a limited partnership, an amount would, if the limited partnership were a corporation, be determined in respect of the limited partnership under subclause (l)(b)(i) or (iii) for its taxation year ending in that particular taxation year, the portion of that amount that may reasonably be considered to be the corporation's share thereof, determined with reference to subsection 127(8.1) of the Federal Act, is the amount required to be added in computing the investment tax credit of the corporation at the end of that particular taxation year.

(6) Where, after December 31, 1996, there has been an amalgamation within the meaning of subsection 87(1) of the Federal Act and one or more of the predecessor corporations had an investment tax credit for any taxation year any portion of which was not deducted by the predecessor corporation in computing its tax otherwise payable under this Act for any taxation year, for the purpose of computing the new corporation's investment tax credit at the end of any taxation year, the new corporation is deemed to be the same corporation as, and a continuation of, each such predecessor corporation.

(7) Where, after December 31, 1996, there has been a winding-up to which subsection 88(1) of the Federal Act applies and the subsidiary had an investment tax credit for any taxation year any portion of which was not deducted by the subsidiary in computing its tax otherwise payable under this Act for any taxation year, and with reference to paragraph 88(1)(e.3) of the Federal Act, for the purpose of computing the parent's investment tax credit at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary.

(8) Subsections 127(9.1) and (9.2) and paragraph (m) of the definition of "investment tax credit" of subsection 127(9) of the Federal Act apply for the purpose of this Section.

(9) The corporation may renounce the investment tax credit in respect of qualified property acquired during the year in whole or in part on or before the time on or before which the corporation is required to file its return of income for the year pursuant to section 150 of the Federal Act and, where the corporation so renounces entitlement to that portion of the credit, the corporation is deemed for all purposes never to have received, to have been entitled to receive or to have had a reasonable expectation of receiving the credit or that part of the credit.

(10) The moneys required to effect the tax reduction to be implemented by this Section must be paid out of moneys appropriated for that purpose by the Legislature.