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Published | Category : Income tax - businesses

Tax Credit for Investment – Changes

Tax legislation will be amended to make changes to the above-mentioned tax credit (referred to in the Budget Speech as the tax credit for investments relating to manufacturing and processing equipment).

Rate adjustments

Tax legislation will be amended to reduce, by 8%, the increased rate of the tax credit for investment that applies in respect of qualified property acquired for use primarily in

  • a remote zone;
  • the eastern part of the Bas-Saint-Laurent administrative region; or
  • an intermediate zone.

Therefore, the maximum rate of the tax credit that a qualified corporation may claim in respect of qualified property acquired for use primarily in a remote zone will be 24% (the 4% base rate plus a 20% increase in the base rate).

Furthermore, the maximum rate of the tax credit that a qualified corporation may claim in respect of qualified property acquired for use primarily in the eastern part of the Bas-Saint-Laurent administrative region will be 16% (the 4% base rate plus a 12% increase in the base rate).

Likewise, the maximum rate of the tax credit that a qualified corporation may claim in respect of qualified property acquired for use primarily in an intermediate zone will be 8% (the 4% base rate plus a 4% increase in the base rate).

Finally, in view of the 8% reduction in tax assistance, a qualified corporation will no longer be able to claim the tax credit for investment in respect of eligible expenses incurred in another region.

These amendments to tax legislation will apply in respect of eligible expenses incurred after December 31, 2016.

Extension of the tax credit for investment and change in the definition of the term "qualified property" 

Tax legislation will be amended to extend by five years the period in which property must be acquired in order to be considered qualified property for purposes of the tax credit for investment. Thus, property may be considered qualified property if it is acquired before January 1, 2023.

The definition of the term "qualified property" will also be changed so that property acquired after December 31, 2016 (other than property acquired for use primarily in a remote zone, the eastern part of the Bas-Saint-Laurent administrative region or an intermediate zone) will not be considered qualified property for purposes of the tax credit for investment.

For more information, see pages A.48 to A.51 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

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