Energy Division

Energy Opportunities Office

Incentives and Government Programs


In the next ten years, Manitoba Hydro (MH) has proposed an expansion plan involving capital expenditures of more than $10 billion which includes the construction of the Keeyask Generating Station (695 MW), the Bipole III HVDC transmission line and converter stations. To capitalize on these expenditures and to provide support for the growing renewable energy sector, the Energy Opportunities Office (EOO) was created. A $30 million Manitoba Energy Jobs Fund was created within the EOO to provide low interest and flexible loans to assist Manitoba companies expand and to attract international companies to establish operations in the province in anticipation of new energy projects.

The mandate of the Energy Opportunities Office will be to proactively promote both local business expansion as well as new investment opportunities in Manitoba’s growing clean energy economy. Manitoba’s clean energy industry includes hydroelectricity generation and transmission, wind energy, solar thermal and photovoltaics, biofuels, electric vehicles, geothermal heating and cooling as well as biomass heating options and energy efficiency programs.

Although the key element of the EOO is the Jobs Fund, the EOO will have other provincial financial support programs including the Green Energy Equipment Tax Credit (GEETC); Manitoba Investment Tax Credit (MITC); Manitoba R&D Tax Credit; the Commercialization Support for Business (CSB) Program and training support from the Department of Growth, Enterprise and Trade.

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Tax Incentives

R & D Tax Incentive

This program targets scientific research and experimental development (as defined for federal purposes) carried on in Manitoba. Corporations earn a 20% tax credit which can be applied against Manitoba corporate income tax payable in the year earned, with unused credits available for a ten-year carry-forward and a three-year carry-back. This program is administered by Canada Revenue Agency on behalf of Manitoba.

For eligible expenses related to scientific research and experimental development activities undertaken under contract with a qualifying Manitoba research institute (including post-secondary institutions and research institutes), the credit is refundable. For in-house R&D expenditures (i.e., R&D not undertaken under contract with an institute in Manitoba) one half of the credit is refundable.

After Tax Cost Of R&D In Manitoba

Over the years, studies by various agencies have repeatedly confirmed that Canada's income tax treatment of research is among the most generous in the world, especially when coupled with provincial incentives.

In 2014, after considering both the federal SR&ED tax credit and Manitoba's provincial R&D tax credit, the after-tax cost of one dollar of R&D expenditure in Manitoba is between 46¢ and 50¢. The following table shows the after-tax cost associated with R&D current expenses for a large corporation and a small privately owned corporation, based on 2014 income tax rates.

After-Tax Cost Of C$100 R&D Expenditures In Manitoba, 2014

 
LARGE CORPORATION
SMALL PRIVATE CORPORATION
Eligible R&D expenditure
$100.00
$100.00
(less) Manitoba tax credit
$20.00
$20.00
(less) Federal tax credit
$12.00
$28.00
Tax deductible amount
$68.00
$52.00
Income Tax Savings    
  Manitoba 1
$8.16
$0.00
  Federal 2
$10.20
$5.72
Net after-tax cost
$49.64
$46.28
  1. Tax deductible amount x provincial corporate income tax rate (12% general rate, 0% small business rate). Note: The Small Business Income Tax Rate was reduced to zero, effective December 1, 2010.
  2. Tax deductible amount x federal corporate income tax rate (18% general rate, 11% small business rate)

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Co-Op Education And Apprenticeship Tax Credits

The Co-op Education and Apprenticeship Tax Credits are a family of programs that provide incentives to employers. All components of this program are fully refundable tax credits and are available to those who hire:

  • co-op students for work placements as part of a recognized college or university program
  • recent graduates of co-op education programs
  • apprentices (early and advanced levels) and certified journeypersons

These tax credits must be pre-approved by Manitoba Finance and must be claimed through the income tax system either on the individual income tax return or the corporate income tax return.

Most employers are eligible, including private companies, co-operatives, crown corporations, municipally-owned businesses, not-for-profit organizations and unincorporated employers.

The following conditions apply to all components:

  • Work must be performed primarily in Manitoba
  • Employer must reside in or have a permanent establishment in Manitoba
  • There is no limit on the number of hires
  • Employer wage costs do not include other government assistance
  • All components are refundable tax credits

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Odour Control Tax Credit

A 10 per cent non-refundable Manitoba corporate income tax credit based on the cost of capital property that prevents, eliminates, or significantly reduces odours arising from organic waste used or created in the course of the corporation's business.

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Government Assistance Programs

In addition to these noted tax incentives, the Manitoba government administers a number of programs that support activities by Manitoba based companies with respect to investment, training, research and development, and technology commercialization. Where Federal government programs are available, the Province of Manitoba is willing to assist Manitoba-based companies in discussions with Federal government departments and agencies to access such support programs.

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Economic Development Programs

Manitoba Industrial Opportunities Program

MIOP provides highly flexible financial support to encourage expansion of existing Manitoba industry or to encourage new companies to relocate in Manitoba. The program utilizes a repayable secured loan form of financial assistance to support projects that demonstrate the potential to provide various economic benefits including job creation and maintenance. MIOP projects provide a significant positive ratio of direct provincial benefits to direct provincial cost.

For more information please visit http://www.gov.mb.ca/jec/busdev/financial/miop/index.html


Green Energy Equipment Tax Credit

Beginning after April 4, 2007, property owners who install a geothermal heat pump system in Manitoba can receive tax credits from the Manitoba government. A 7.5% tax credit on geothermal heat pumps that are manufactured in Manitoba for use in Manitoba, plus a 15% tax credit on the remainder of the capital costs of the geothermal system (excluding the heat pump) if the installer is certified by the Manitoba Geothermal Energy Alliance, Inc. (see www.mgea.ca)

A further 7.5% tax credit is provided to Manitoba-based manufacturers on the sale of heat pumps that are made in Manitoba and sold for use in Manitoba.

The Green Energy Equipment Tax Credit is extended to solar thermal energy systems purchased for use in Manitoba starting in 2009. Purchasers who install specified solar heating equipment in Manitoba qualify for a refundable 10% Green Energy Equipment Tax Credit on the eligible capital costs.

For more information please visit: http://www.gov.mb.ca/jec/invest/busfacts/govt/manuf_taxc.html

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Commercialization Support for Business Program

The Commercialization Support for Business Program supports entrepreneurship, commercialization, and business development by offering a comprehensive suite of financial assistance and services across the business lifecycle. The Program targets entrepreneurs and businesses seeking to start-up, expand or modernize a business in Manitoba. There are three funding streams offered under the Program:

Stream 1 - Product Development (Max up to $50,000) - Funding targets market validation studies that include third party verification of the core results, registration of intellectual property, construction of a working prototype or finished good and obtaining product certification.

Stream 2 - Commercialization (Max up to $250,000) - Funding targets ventures moving from prototype to a market-ready product.

Stream 3 - Market Development (Max up to $30,000) - Funding targets ventures who engage in activities that will enable them to enter new markets outside of Manitoba.

The program provides 50% cost shared funding to a maximum of $250,000 depending on the funding stream.

For more information visit: http://www.gov.mb.ca/jec/busdev/financial/csb/index.html

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Support for Training

Manitoba Education and Training may offer financial assistance to businesses that are bringing new jobs to Manitoba. The assistance may be used to pay for eligible expenditures related to the development and delivery of appropriate training for new employees. Financial assistance packages under this program are custom-prepared on a company-by-company and is dependent on the salary level and type of job being created. The amount of assistance negotiated is based on a number of factors including the number, type and salary levels of the jobs being created, the type and length of training, eligible training costs and the economic benefit to Manitoba resulting from the employment provided. In order for the project to be considered, detailed information regarding the project is required to design a tailored assistance package. This includes:

  • Company history and description of the new business venture including the company's financial plan for the investment;
  • The number and the types of new positions created and in what time frame;
  • The hourly or annual wage of each type of position and if available, the salary range for each job type;
  • Position descriptions, if available, for each job type that describe the responsibilities of and the competencies required for each job type;
  • Entry level qualifications for each job type;
  • Company's policy and track record on equity hiring;
  • A commitment to retaining new employees (or their replacements) for at least one year following training;
  • A detailed description of the proposed training which would include a description of the training to be provided to each employee, the curriculum to be developed or used, the method of delivery (classroom, on-the-job, on-line, etc.), the number of hours of training per employee, who will deliver what training (in-house staff or contract out), qualifications of the trainers (linkages to post-secondary institutions), and whether employees will receive a recognized certification;
  • Company contributions toward specific training cots as well as “in-kind” costs such as salaries of staff delivering training (including on-the-job training) and/or assisting in curriculum development, equipment and facility use, contributions from other partners;
  • Capital, other investments, spin-off jobs, etc. that would benefit Manitoba's economy.

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Small Business Venture Capital Tax Credit Program

The Small Business Venture Capital Tax Credit Program assists eligible small corporations to issue new equity to primarily new investors. Under the program, the small corporation will be able to issue up to a limit of $10,000,000 of new equity that will be eligible investments for the SBVCTC.

The SBVCTC is not a tax benefit for the eligible corporation. It provides a personal tax credit to eligible investors in the corporation. Eligible investors who purchase eligible investments are able to earn a 45% non-refundable provincial tax credit up to an annual limit of $202,500 in provincial tax credits.

For more information please visit http://www.gov.mb.ca/jec/busdev/financial/index.html.

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Manufacturing Investment Tax Credit

Corporations engaged in manufacturing or processing in Manitoba qualify for a 10% Manufacturing Investment Tax Credit based on the capital cost of new and used manufacturing buildings, machinery and equipment acquired for use in manufacturing or processing in Manitoba. Eight-tenths of the 10% tax credit is refundable. The remaining two-tenths can be applied against Manitoba corporation income tax payable in the year earned, or carried back to recover Manitoba income tax paid in the previous three years, or carried forward up to 10 years to reduce future Manitoba income taxes.

Reports by the C.D. Howe Institute and the federal Department of Finance have shown that, after considering the impact of taxes and investment tax credits, Manitoba has the lowest marginal effective tax rate for investments in manufacturing equipment and facilities west of the Atlantic provinces.


R & D Tax Incentive

This program targets scientific research and experimental development (as defined for federal purposes) carried on in Manitoba. Corporations earn a 20% tax credit which can be applied against Manitoba corporate income tax payable in the year earned, with unused credits available for a ten-year carry-forward and a three-year carry-back. This program is administered by Canada Revenue Agency on behalf of Manitoba.

For eligible expenses related to scientific research and experimental development activities undertaken under contract with a qualifying Manitoba research institute (including post-secondary institutions and research institutes), the credit is refundable. For in-house R&D expenditures (i.e., R&D not undertaken under contract with an institute in Manitoba) one half of the credit is refundable.

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Manitoba Hydro

Manitoba's Hydro's investment in research and development has had a substantial impact on its current success. Since it is just as important for Manitoba Hydro's customers to stay at the forefront of technology, Manitoba Hydro may co-fund R&D projects that enable companies to use electricity more competitively. For example, Manitoba Hydro's R&D commitment can help a company look at innovative processing, wash water re-use, by-product processing as well as other aspects of the production process.

Manitoba Hydro can also assist with a company's plant optimization activities. Manitoba Hydro's engineers are specialists in advanced technology. They can assist a company in comparing and testing different technologies to fit specific needs, both technically and financially. Their corporate team can also help a company make the right choices in purchasing new equipment and implementing new processes.

For more information please contact Rob Kirchmann at 204-360-7666 or RKirchmann@hydro.mb.ca

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CANADA

Scientific Research & Experimental Development Program

Administered by Canada Revenue Agency, the Scientific Research and Experimental Development (SR&ED) Program encourages industrial R&D by allowing Canadian businesses to earn investment tax credits for R&D expenses incurred in Canada as well as certain R&D expenses incurred outside Canada.)

Investment tax credits can be earned for qualifying current SR&ED expenditures such as wages, materials, some overhead, and for contract R&D performed for the claimant. Qualified SR&ED expenditures can be deducted in the current year, or carried forward in an SR&ED expenditure pool and deducted at a later date. The pool does not expire, and the timing and amount of deductions taken are at the discretion of the taxpayer.

Generally, small Canadian-controlled private corporations (CCPC's) will be able to receive a refundable investment tax credit (ITC) of 35% of qualifying SR&ED expenditures, to a maximum of $3 million of expenditures. Most other Canadian corporations, proprietorships, partnerships, and trusts can receive a non-refundable investment tax credit of 15% of qualifying SR&ED expenditures. Unused investment tax credits can be carried back 3 years, or forward 20 years.

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Western Innovation Initiative (WINN)

WINN is a $100 million five-year federal initiative that offers repayable contributions for small- and medium-sized enterprises (SMEs) with operations in Western Canada to move their new and innovative technologies from the later stages of research and development to the marketplace. It is anticipated that there will be up to two application intakes per year.

For information please visit www.wd.gc.ca/eng/14857.asp

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National Research Council - Industrial Research Assistance Program (NRC-IRAP)

To stimulate wealth creation for Canada through technological innovation, the IRAP program helps small and medium sized enterprises within Canada develop technologies and successfully commercialize them in a global marketplace.

For information please visit www.nrc-cnrc.gc.ca/eng/irap/index.html


Natural Sciences and Engineering Research Council of Canada (NSERC)

NSERC supports focused interdisciplinary collaborative research projects involving any field of the natural sciences or engineering and any field of the health sciences. Proposed research projects should be innovative and lead to health benefits for Canadians, more effective health services, and/or economic development in health-related areas.

For information please visit www.nserc-crsng.gc.ca/index_eng.asp

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Appendix A: KPMG Competitive Alternatives Report 2014

The 2014 edition of KPMG's Competitive Alternatives study, released March 2014, undertakes an extensive comparison of business costs in 10 countries. The report compares business costs in 19 industries in a global total of 131 cities.

The basis for comparison is the after-tax cost of start-up and operation of facilities in each of the 19 selected industries. After-tax business costs are expressed as an index, with the United States being assigned the baseline index of 100.0. A cost index below 100.0 indicates lower costs than the US average, while an index greater than 100.0 indicates higher costs than the US average.

CANADA

The study found Canada to be second after Mexico in terms of overall cost competitiveness. Canada had an overall cost index of 92.8, representing a cost advantage of 7.2% over the US average.

MANITOBA

Winnipeg had the best ranking among the 26 North American Midwestern cities featured in the study, with an overall cost advantage of 8.0% relative to the US average (cost index of 92.0, compared to US baseline of 100.0). Among Canada's largest cities, (population > 0.5 million) Winnipeg is second in terms of overall cost competitiveness.

Compared to key centres in the US Midwest, Winnipeg has an overall cost advantage of:

  • 4.8% relative to Dallas-Ft. Worth
  • 6.2% relative to Minneapolis
  • 6.4% relative to Denver
  • 7.1% relative to Chicago

The KPMG study compares cities on the basis of business costs, which are only one factor for consideration in a site location decision. Winnipeg offers a number of other advantages not considered in the study, including:

  • One of Canada's most diversified and stable economies
  • World-class manufacturers, with a strong export orientation
  • Abundant, reliable hydroelectric power, with the lowest published rates in Canada
  • Close proximity to the US market, with standard border wait times of 10 minutes or less
  • A strategic mid-continent location, with ability to ship by air, rail, road, and sea
  • An educated, skilled and multilingual workforce known for its strong work ethic
  • Strong R&D capabilities, with generous R&D tax incentives
  • An enviable quality of life, with affordable living costs, some of the finest parks and wilderness areas in North America, and a wide variety of major cultural attractions.

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