In 2003, the government of Manitoba introduced a new tax credit called the Community Enterprise Development Tax Credit (the “CED Credit”), which was designed to encourage Manitoba resident investors, and certain eligible corporations with a permanent establishment in Manitoba, to invest in community-based enterprise development projects. Manitoba announced certain enhancements to the CED Credit in its 2014 Budget and again in its 2015 Budget, which was tabled on April 30, 2015.
In order for a community-based enterprise to be considered an “eligible investment” for purposes of the CED Credit, the particular enterprise must be either a “community enterprise” or a “community development investment fund corporation” (as defined in the regulations that govern the CED Credit (the “CED Regulations”)) and the investment must be shares.
The criteria to meet in order to be considered either a “community enterprise” or a “community development investment fund corporation” are quite lengthy and are set out in detail in the CED Regulations. The Government of Manitoba has indicated generally that enterprises with net assets of $10,000, gross assets of $25 million, and no more than 200 employees will qualify. Notably, organizations that are ineligible for the CED Credit include professional practices as well as enterprises involved in primary industries, mineral exploration, recreational/seasonal activities, or commercial property development.
If an investor qualifies for the CED Credit and the enterprise is also approved, upon submitting a successful application to the Manitoba Department of Agriculture, Food and Rural Development, the investor will receive a 45% income tax credit on a maximum annual investment of $60,000 – this translates to a maximum of $27,000 in tax credits. In its 2014 Budget, Manitoba announced that the 45% tax credit rate would be effective for eligible shares issued after 2014 and that the CED Credit was extended to 2020.
In its 2015 Budget, Manitoba announced that for 2014 and subsequent taxation years, it intends to permit eligible investments to include shares purchased during the first 60 days of the following year. A positive result of this measure is that an eligible investor who purchases shares after December 31, 2015 and no later than March 1, 2016 may claim the CED Credit in either year, provided that all of the criteria are met in the circumstances.
The latest form to apply for the CED Credit is available on the Government of Manitoba’s website.