This new program provides a provincial income
tax credit of 45% of the purchase price of Qualifying Resort Development
Property Units outside the North East Avalon.
The Province of Newfoundland and Labrador in no way guarantees the
value of any Qualifying Resort Development Property Unit sold by a
Qualifying Resort Developer, nor does it in any way express an opinion as to
the financial condition of a resort business or the merits of an investment
in the units.
Qualifying Resort Developer
A Qualifying Resort Developer is a business registered to develop a
Qualifying Resort Development Complex, and includes a corporation,
partnership or limited partnership but does not include a trust.
Qualifying Resort Development Complex
A Qualifying Resort Development Complex is a newly constructed accommodation
facility, a newly constructed expansion, or a property where at least 90% of
the building area is rebuilt. It must contain a minimum of 50 Qualifying
Resort Development Property Units, be located outside the North East Avalon,
and have obtained Canada Select 4 rating. It must also have at least three
of the following features:
Qualifying Resort Development Property
Unit
A Qualifying Resort Development Property Unit is a town house, chalet or a
hotel condominium of the Qualifying Resort Development Complex, which must
be at least 35 square metres, and must be acquired by the Qualifying
Investor through an initial freehold sale or 99 year lease. The unit holder
must enter into a 20 year contract relating to the availability of the unit
for the rental pool of the Qualifying Resort Development Complex for at
least three-quarters of the time annually.
Time Restrictions
The Qualifying Resort Developer has 12 months after being registered to
commence construction of a Qualifying Resort Development Complex and 24
months after the commencement of construction to achieve Canada Select 4
status, complete construction and begin offering Qualifying Resort
Development Property Units for sale.
Maximum Capital Approved
The maximum amount of capital that can be approved by the minister for a
Qualifying Resort Development Complex is $50 million.
North East Avalon
Property development projects outside the North East Avalon may participate
in this tax credit program. The North East Avalon includes Bauline,
Conception Bay South, Flatrock, Logy Bay-Middle Cove-Outer Cove, Paradise,
Petty Harbour, Portugal Cove-St Philip’s, Pouch Cove, Torbay, Mount Pearl
and St. John’s.
Qualifying Investor
This is a person, including a corporation, other than a trust who invests in
a Qualifying Resort Development Property Unit, where that person and the
Qualifying Resort Developer or owner are at arm’s length from each other and
where, in the case of an individual investor, the person is 19 years of age
or older.
Restrictions on When Investments Must be
Made
The Qualifying Resort Development Property Unit must be acquired after June
14, 2007 but no more than five years after the units are first made
available for sale.
Maximum Tax Credits
The total tax credits earned respecting investments by a person can not
exceed a lifetime limit of $150,000. The maximum that can be claimed in any
one year by an investor is $50,000 and where credits are unused they can be
carried forward seven years and back three, but can not be carried back
before the 2006 taxation year. Where more than one person invests in a unit,
the maximum tax credit that may be earned in aggregate by all investors is
limited to $150,000 per unit.
Holding Period
A Qualifying Investor shall not sell or transfer ownership of the property
unit for a minimum of 5 years after the original purchase of the unit.
Application Process for Qualifying Resort
Developer
If a business intends to construct a resort property under this program
it must apply on the required form to the minister before January 1, 2013
for certification as a Qualifying Resort Developer.
An application for a certificate of registration shall:
Process to Receive Tax Credits
The Qualifying Resort Developer shall, not more than 90 days after the sale
of a Qualifying Resort Development Property Unit, apply to the minister on
behalf of each Qualifying Investor for a tax credit receipt respecting to a
tax credit to be claimed by the Qualifying Investor. An application shall be
made in the required form and shall be signed by an authorized officer of
the Qualifying Resort Developer and shall be accompanied by additional
information that the minister may require.
The minister will then issue the tax credit receipt and the Qualifying
Investor will attach the receipt to the appropriate income tax return for
the year, identified on the tax credit receipt.
Monitoring and Compliance
Qualifying Resort Developers must supply information as required by the
minister. A Qualifying Resort Developer, for example, shall report annually
to the minister on the availability of the property units for the rental
pool. Also, the provincial Department of Finance will be conducting routine
on-site audits to ensure compliance with all aspects of the tax credit
program.
Government Recourse/Penalties
The minister may, at any time after a certificate of registration for a
business has been issued, revoke that certificate if in his or her opinion,
that business has not complied with the regulations or the business
misrepresented information to the minister either knowingly or in a manner
that would be considered negligent.
Where the
minister revokes a certificate of registration after a Qualifying Resort
Development Property Unit is sold, where tax credit receipts have been
issued, the Qualifying Resort Developer is liable for the full amount of
such tax credits and shall immediately surrender to the minister from the
escrow account an amount equal to the aggregate of the amounts of the tax
credit receipts issued for Qualifying Resort Development Property Units.
Where tax credit receipts have not been issued, the minister will not issue
tax credit receipts with respect to that Qualifying Resort Developer.
Breach of the Qualifying Resort Developer’s five year operating commitment
will also result in the surrender of the escrow account to the minister.
Further, where a Qualifying Investor receives, directly or indirectly, the
benefit of all or a part of a tax credit that the Qualifying Investor is not
entitled to, the Qualifying Investor shall pay the amount of the benefit to
the minister plus interest at the rate prescribed under the federal Act.
Additional Information
For more information about corporate income taxes in Newfoundland and Labrador, please contact the Taxation and Fiscal Policy Branch.