Manufacturing and Processing Investment Tax Credit

Corporations that invest in capital property for use in qualified activities in Newfoundland and Labrador can claim a credit of 10% of the capital cost of eligible property to reduce Newfoundland and Labrador tax otherwise payable and in some cases may be refunded a portion of the credit.

Eligibility:

  • Corporations with a permanent establishment in Newfoundland and Labrador
  • All qualified property eligible for the Atlantic Investment Tax Credit that is
    • Located in Newfoundland and Labrador
    • Acquired for use in the course of a business operating in Newfoundland and Labrador,
    • Does not include Qualified Resource Property

How to apply

The manufacturing and processing investment tax credit will be the applied to reduce provincial tax otherwise payable, or refunded on the corporation’s income tax return.

Refundable

Canadian Controlled Private Corporations (CCPC) may be able to receive a refund of any amount not applied to reduce tax payable, up to 40% of the total manufacturing and processing tax credit.

Carry forward/back

Any provincial credit not applied or refunded in the current taxation year, may be applied to reduce Newfoundland and Labrador tax payable in any of the next 20 years, or any of the preceding three years, but cannot be applied to a taxation year that ends before April 7, 2022.

Example:

Assume three separate CCPCs, identical except for the amount of Newfoundland and Labrador tax otherwise payable, each acquire eligible capital property at a cost of $150,000. This provides a manufacturing and processing investment tax credit $15,000 ($150,000 X 10%) with a maximum refundable amount of $6,000 ($15,000 X 40%)

CORP A CORP B CORP C
Newfoundland and Labrador tax payable $8,000 $10,000 $20,000
ITC applied 8,000 10,000 15,000
Refundable 6,000 5,000 0
Available to Carry forward/back 1,000 0 0

The Federal Government administers the Atlantic Investment Tax Credit. The Canada Revenue Agency (CRA) can answer your questions regarding qualified property or terms contained in subsection 127(9) of the federal income tax act. You can contact them at 1-800-959-5525. Additional information can be obtained from the Atlantic investment tax credit – Canada.ca website.