December 9, 2004
For immediate release
Government Announces Innovative Tax Program to Encourage Business Investment
Development and Technology
“The introduction of these measures signals a new direction of business development in PEI,” said Development and Technology Minister Mike Currie. “These incentives will be performance driven, tied to outcomes and results. We will invest in sectors which have been proven winners, such as aerospace, and in emerging sectors, such a renewable energy and bio-science.”
The tax credits apply to companies in six strategic areas: aerospace; bio- science; interactive, information and communications technology; renewable energy; financial services (except share purchase); and export-focussed manufacturing and processing.
Two of the incentives are aimed at corporations and two at individuals. The incentives will be available only to companies who are doing business on PEI or those individuals who pay taxes here.
The tax credits will be available to companies and individuals who have obtained pre-approval. Prince Edward Island Business Development Inc. will be responsible for issuing approvals.
The four new programs are:
The Innovation and Development Tax Credit applies to companies in the key sectors on a project-by-project basis. The tax credit will encourage companies to develop new and innovative products, processes or services. A rebate of corporate income tax will be based on up to 35% of approved labour costs, factored up by 50% to cover overhead for the project. Rebate certificates will be issued on completion of the project. Projects may last for up to two years.
Enriched Investment Tax Credit applies only to manufacturing and processing activities as defined under the federal Income Tax Act. The province currently offers a ten percent investment tax credit for capital investment. This program will provide an additional 25% credit to those companies which invest in expansion under the program’s criteria. Approvals for the program will be issued by Prince Edward Island Business Development Inc and will be based on factors such as economic impact, export focus, quality of business plan and planned productivity.
Specialized Labour Tax Credit will apply to individuals with special skills who move to PEI to work in strategic sectors. The rebate will be available only when the skills are not available locally. The 17% tax rebate will be on approved labour costs for certified specialized workers required to meet specific demands in key sectors. The maximum term for one individual to collect the rebate is three years. The rebate is subject to prior approval from Prince Edward Island Business Development Inc.
Share Purchase Tax Credit will offer a 35% tax rebate to individuals who pay income tax in Prince Edward Island and invest in Island companies who are active in a strategic sector. The rebate is capped at $35,000 a year. Eligible companies apply for the certificate which, if approved, is passed to the investor. The company and the investor may share no business or personal interests.
The Progressive Tax Rebate program will take effect immediately. For more information on the Progressive Tax Rebate Program go to the following Web site: www.gov.pe.ca/development/ptrp/index.php3