Agri-processing Investment Tax Credit Regulation

(Consolidated up to 180/2024) alberta regulation 82/2023 Investing in a Diversified Alberta Economy Act AGRI‑PROCESSING INVESTMENT TAX CREDIT REGULATION Table of Contents 1 Interpretation 2 Eligible capital expenditures 2.1 Information required for conditional approval letter 3 Review of application 3.1 Changes to be reported 4 APITC certificate 4.1 Additional information required re at‑risk amount 4.2 Zero dollar apportionment 4.3 Partnership percentage 5 Maximum amount and portion 5.1 Special rules for partnership applicants 5.2 Tax credit amount for corporate member of partnership applicant 5.3 Tax credit amount for corporate member of a member of partnership applicant 6 Serving notice 7 Expiry 7.1 Transitional 8 Coming into force Interpretation 1 (1) In this Regulation, (a) “Act” means the Investing in a Diversified Alberta Economy Act ; (b) “affiliate”, if used to indicate a relationship between persons, means (i) one is the subsidiary of the other, (ii) both are subsidiaries of the same corporation, or (iii) both are controlled by the same person or the same group of persons; (b.1) “at‑risk amount” means, in respect of a limited partner, the amount described in subsection 96(2.2) of the federal Act; (c) repealed AR 180/2024 s2; (c.1) “corporate applicant” means an eligible applicant under section 69.2(a) of the Act; (d) “depreciable property” means depreciable property as defined in subsection 248(1) of the federal Act; (e) “fair market value” means fair market value as determined by the Minister based on the report of a qualified person or another person who is satisfactory to the Minister; (e.1) “partnership applicant” means an eligible applicant under section 69.2(b) of the Act; (e.2) “partnership percentage” means, in respect of a member of a partnership, the share of the profits, income or other compensation of the partnership as determined in accordance with section 4.3, expressed as a percentage; (f) “qualified person” means an auditor, chartered professional accountant, engineer or real estate appraiser who is a member in good standing with a professional association recognized by the Minister. (2) For the purposes of Part 2.1 of the Act and this Regulation, (a) “eligible value‑added agricultural activity” includes further physical transformation or upgrading of the agricultural inputs that have previously been transformed or upgraded; (b) “subsidiary”, in respect of another corporation, means a corporation that is controlled by that other corporation. (3) For the purpose of Part 2.1 of the Act and this Regulation, a facility is “in operation”, (a) in the case of a new facility, once the facility begins to be used for the eligible value‑added agricultural activity or activities set out in the approved investment plan, and (b) in the case of an existing facility, once there is an increase in the facility’s productive capacity for the eligible value‑added agricultural activity or activities set out in the approved investment plan. (3.1) For the purposes of this Regulation, a transaction between a person or a partnership and another person or partnership is a non‑arm’s length transaction if (a) the persons are affiliates, (b) one person or partnership is a member of the other partnership, (c) the transaction is between a member of a partnership applicant and another person that is an affiliate of any other member of the partnership applicant, (d) the transaction is between a member of a partnership applicant and another person that is an affiliate of a member of a member of the partnership applicant, (e) a party to the transaction is in a position to compel the other party to enter into the transaction, (f) the consideration for a party to the transaction is in whole or in part based on or related to (i) any other contractual or other obligation with the other party to the transaction, or (ii) any consideration under a contractual or other obligation described in subclause (i), or (g) the Minister determines that (i) one person or partnership has significant influence over the other, or (ii) the transaction is not one that would be made in an open market between willing parties to a transaction of that nature on competitive and reasonable terms. (4) to (9) Repealed AR 180/2024 s2. AR 82/2023 s1;180/2024 Eligible capital expenditures 2 (0.1) For the purposes of section 69.3(a) of the Act, to be an eligible capital expenditure, an expenditure must be made, (a) where an applicant is a corporate applicant, by the applicant, or (b) where an applicant is a partnership applicant, by (i) the applicant, (ii) one or more members of the applicant acting on behalf of the applicant, (iii) one or more members of a member of the applicant acting on behalf of the applicant or on behalf of a member of the applicant, or (iv) any combination of the applicant or members referred to in subclauses (i) to (iii). (1) For the purpose of section 69.3(b) of the Act, “prescribed property” means real property and depreciable property. (2) For the purpose of section 69.3(b) of the Act, the types of expenditures that may be considered eligible capital expenditures include, but are not limited to, (a) the acquisition of land on which the eligible value‑added agricultural activity will take place, (b) the costs of qualified professional services associated with the prescribed property, and (c) the costs of installation of depreciable property or of a capital lease of prescribed property. (3) For the purposes of Part 2.1 of the Act and this Regulation, the following are not eligible capital expenditures: (a) automobiles and automotive equipment, including forklifts; (b) furnishings; (c) office equipment; (d) portable tools, machinery and equipment; (e) power‑operated movable equipment for excavating, moving, placing, or compacting earth, rock, concrete or asphalt; (f) intellectual property and goodwill; (g) non‑capital lease costs; (h) in the case of land described in subsection (2), any excess land as determined by a qualified person that the eligible applicant may be able to re‑sell, offer for lease, or develop for a purpose unrelated to the eligible value‑added agricultural activity. (4) For the purposes of section 69.3(c) of the Act, (a) with respect to a new facility, an expenditure is an eligible capital expenditure only if it is directly related to establishing the productive capacity of that facility for an eligible value‑added agricultural activity, and (b) with respect to an existing facility, an expenditure is an eligible capital expenditure only if it is directly related to increasing the productive capacity of that facility for an eligible value‑added agricultural activity. (5) For the purposes of section 69.3(c) of the Act, to be an eligible capital expenditure, an expenditure must have been made on or after February 7, 2023. (6) Unless the Minister is satisfied that the expenditure represents a valuable investment in Alberta, to be an eligible capital expenditure, an expenditure must not result from a non‑arm’s length transaction. (7) In determining the value of an eligible capital expenditure, the Minister shall use the lesser of the actual cost of the expenditure and the fair market value of the expenditure. (8) For the purposes of subsection (7), the eligible applicant must provide evidence satisfactory to the Minister with respect to the actual costs of the expenditure. (9) In determining the value of an eligible capital expenditure, the Minister shall deduct the value of any federal, provincial or municipal assistance respecting the expenditure, including a grant, subsidy, forgivable loan, deduction from tax or investment allowance, that is received by, is entitled to be received by or can reasonably be expected to be received by, (a) where the applicant is a corporate applicant, the applicant, and (b) where an applicant is a partnership applicant, (i) the applicant, (ii) a member of the applicant, or (iii) a member of a member of the applicant. (10) No deduction shall be made under subsection (9) in respect of a tax credit received, expected to be received or reasonably expected to be received under Part 2.1 of the Act and this Regulation. AR 82/2023 s2;180/2024 Information required for conditional approval letter 2.1 For the purposes of section 69.4(1) of the Act, an application for a conditional approval letter submitted by a partnership applicant must be accompanied with (a) a copy of the partnership agreement setting out the mutual rights and duties of the members of the applicant, (b) a copy of any current, relevant partnership agreement setting out the mutual rights and duties of the members of a member of the applicant, (c) a list of the partnership percentages of all of the members of each partnership referred to in clauses (a) and (b) as of the date the applicant applies for the conditional approval letter, and (d) any other information requested by the Minister relating to the applicant or a member of the applicant or a member of a member of the applicant, including any relationship between or among any of them. AR 180/2024 s4 Review of application 3 (1) For the purposes of section 69.4(2)(b) and (3)(b) of the Act, in the case where a new facility is constructed or an existing facility is expanded solely for the purpose of carrying out all or any of the following activities with respect to a raw or primary agricultural product, any agricultural by‑product or waste or agricultural inputs referred to in section 1(2)(a), that activity is not an eligible value‑added agricultural activity: (a) cleaning; (b) bagging; (c) handling; (d) storing; (e) sorting. (1.1) For the purposes of section 69.4(3)(d) of the Act, the minimum total of the eligible capital expenditures in a proposed investment plan is $10 000. (2) For the purposes of section 69.4(3)(f) of the Act, the minimum total capital expenditures in a proposed investment plan is $10 000 000. (3) Unless the Minister is satisfied that the expenditure represents a valuable investment in Alberta, for the purposes of subsection (2), an expenditure resulting from a non‑arm’s length transaction shall not be included in the calculation of the total capital expenditures. (4) In calculating the amount of total capital expenditures in a proposed investment plan, the Minister may deduct the value of any federal, provincial or municipal assistance, including a grant, subsidy, forgivable loan, deduction from tax or investment allowance, that is received by, is entitled to be received by or can reasonably be expected to be received by an applicant, a member of an applicant or a member of a member of an applicant if the Minister is satisfied that the assistance relates to one or more capital expenditures in the proposed investment plan. (5) No deduction shall be made under subsection (4) in respect of a tax credit received, expected to be received or reasonably expected to be received under Part 2.1 of the Act and this Regulation. AR 82/2023 s3;180/2024 Changes to be reported 3.1 (1) Where an applicant is a corporate applicant, the prescribed changes respecting the applicant that the applicant must report for the purposes of section 69.5(4) of the Act are any of the following: (a) an amalgamation as described in subsection 87(1) of the federal Act; (b) the dissolution of the applicant; (c) the winding‑up of the applicant if the applicant is a subsidiary and the rules in subsection 88(1) of the federal Act apply to the winding‑up of that subsidiary. (2) Where an applicant is a partnership applicant, the prescribed changes that the applicant must report for the purposes of section 69.5(4) of the Act are any of the following: (a) the dissolution of the applicant or of a partnership that is a member of the applicant; (b) an amendment to a partnership agreement referred to in section 2.1; (c) a change to the partnership percentage of the members of the applicant or of the members of a member of the applicant; (d) an amalgamation of a corporate member of the applicant or of a corporate member of a member of the applicant, as described in subsection 87(1) of the federal Act; (e) the dissolution of a corporate member of the applicant or of a corporate member of a member of the applicant; (f) the winding‑up of a corporate member of the applicant or of a corporate member of a member of the applicant, if the corporate member is a subsidiary and the rules in subsection 88(1) of the federal Act apply to the winding‑up of that subsidiary; (g) any other change in the relationships between or among the partnership applicant, the members of the partnership applicant or the members of a member of the partnership applicant. AR 180/2024 s6 APITC certificate 4 (1) For the purposes of section 69.7(1) of the Act, an application for an APITC certificate must be accompanied with (a) evidence satisfactory to the Minister that a facility is in operation and that the eligible applicant has made eligible capital expenditures, (i) in the case of a new facility, for the purposes of establishing the productive capacity of that facility with respect to an eligible value‑added agricultural activity, or (ii) in the case of an existing facility, for the purposes of increasing the productive capacity of that facility with respect to an eligible value‑added agricultural activity, and (b) where the applicant is a partnership applicant, (i) a copy of the partnership agreement setting out the mutual rights and duties of the members of the applicant that is in effect as of the date the applicant applies for the APITC certificate, (ii) a copy of any relevant partnership agreement setting out the mutual rights and duties of the members of a partnership that is a member of the applicant that is in effect as of the date the applicant applies for the APITC certificate, (iii) the partnership percentage of all of the members of each partnership referred to in subclauses (i) and (ii) as of the date the applicant applies for an APITC certificate, and (iv) any other information requested by the Minister relating to the partnership applicant or a member of the partnership applicant or a member of a member of the partnership applicant, including any relationship between or among any of them. (2) The evidence referred to in subsection (1) must be supported by a document or written materials prepared by a qualified person who is (a) satisfactory to the Minister, and (b) dealing at arm’s length with the eligible applicant and, if the applicant is a partnership applicant, with the members of the applicant and, if applicable, with the members of each member of the applicant. (2.1) Notwithstanding subsection (2)(b), the Minister may authorize a document or written materials to be prepared by a qualified person who is not dealing at arm’s length with the eligible applicant or with a member of the applicant or a member of a member of the applicant if the Minister considers it appropriate in the circumstances. (3) An eligible applicant may not apply for an APITC certificate more than 3 years after its conditional approval letter is issued. (4) For the purposes of section 69.7(3.1)(d) of the Act, the applicant must satisfy the Minister that it has made at least the minimum total capital expenditures referred to in section 3(2) with respect to its approved investment plan. (5) Unless the Minister is satisfied that the expenditure represents a valuable investment in Alberta, for the purposes of subsection (4), an expenditure resulting from a non‑arm’s length transaction shall not be included in the calculation of the total capital expenditures. AR 82/2023 s4;180/2024 Additional information required re at‑risk amount 4.1 (1) For the purposes of section 69.7(3.1)(d) of the Act, a partnership applicant must provide to the Minister, in respect of an APITC certificate, within 12 months after submitting an application under section 69.7(1) of the Act, (a) each at‑risk amount in respect of the time specified in subsection (2) that is necessary for the Minister to determine the tax credit amount to be specified on the APITC certificate, or (b) a request under section 4.2 for a $0 apportionment in respect of the APITC certificate. (2) The time in respect of which each at‑risk amount is to be provided under subsection (1) is, (a) where the application under section 69.7(1) of the Act is submitted on the last day of the fiscal period of the relevant partnership, the end of that fiscal period, or (b) where the application under section 69.7(1) of the Act is submitted on a day that is not the last day of the fiscal period of the relevant partnership, the end of the day on which the application is submitted. (3) Each at‑risk amount provided in respect of an APITC certificate must, if applicable, be adjusted to exclude from its calculation any amount of anticipated API tax credit under section 25.04 of the Alberta Corporate Tax Act that relates to the APITC certificate. (4) An at‑risk amount provided under this section must be calculated by a qualified person who is dealing at arm’s length with the partnership applicant, with the members of the applicant and, if applicable, with the members of each member of the applicant. (5) Notwithstanding subsection (4), the Minister may authorize an at‑risk amount to be calculated by a qualified person who is not dealing at arm’s length with the partnership applicant or with a member of the applicant or a member of a member of the applicant if the Minister considers it appropriate in the circumstances. (6) The partnership applicant must provide any further supporting information requested by the Minister in respect of an at‑risk amount. AR 180/2024 s8 Zero dollar apportionment 4.2 (1) During the 12‑month period referred to in section 4.1(1), a partnership applicant may, in respect of an APITC certificate, request that a corporate member be apportioned an amount of $0 on the APITC certificate for the purposes of section 69.8(1.1) of the Act. (2) A request under subsection (1) (a) must be accompanied with evidence of the consent of the corporate member, and (b) is final. AR 180/2024 s8 Partnership percentage 4.3 (1) A partnership percentage shall only include the share of the profits, income or other compensation of the partnership from an eligible value‑added agricultural activity. (2) For the purposes of determining a partnership percentage, the Minister shall consider the terms of a partnership agreement required to be provided under this Regulation. (3) If, in the opinion of the Minister, the partnership agreement does not reasonably set out the true share of the profits, income or other compensation from an eligible value‑added agricultural activity, the Minister may require the partnership applicant to provide additional information to substantiate a member’s share. (4) If, in the opinion of the Minister, the partnership agreement and any additional information provided under subsection (3) does not reasonably support the partnership applicant’s determination of a member’s partnership percentage, the Minister may determine the partnership percentage of the member. AR 180/2024 s8 Maximum amount and portion 5 (1) For the purposes of section 69.8(1) and (1.1) of the Act, the prescribed maximum amount in eligible capital expenditures made in respect of an applicant’s approved investment plan is $1 458 333 333. (2) For the purposes of section 69.8(2) of the Act, the maximum portion of the amount specified on an APITC certificate that may be claimed by a corporation is (a) 20% of the total amount in the first taxation year, (b) 30% of the total amount in the 2nd taxation year, and (c) 50% of the total amount in the 3rd taxation year. AR 82/2023 s5;180/2024 Special rules for partnership applicants 5.1 (1) In this section and in sections 5.2 and 5.3, “notional credit” means the amount equal to 12% of the total eligible capital expenditures made in respect of the partnership applicant’s approved investment plan, subject to the prescribed maximum, as referred to in section 69.8(1.1) of the Act. (2) Where section 5.2 or 5.3 refers to an at‑risk amount, that at‑risk amount is to be calculated in the same manner and in respect of the same time as set out in section 4.1. (3) Where section 5.2 or 5.3 refers to a partnership percentage, that partnership percentage is as of the date the partnership applicant applies for an APITC certificate under section 69.7 of the Act. AR 180/2024 s10 Tax credit amount for corporate member of partnership applicant 5.2 (1) This section applies to determine the apportionment of the tax credit amount referred to in section 69.8(1.1) of the Act to a corporate member of a partnership applicant. (2) Where the corporate member is not a limited partner, the tax credit amount specified on an APITC certificate issued to the corporate member is the amount calculated using the following formula: A x B where A is the notional credit of the partnership applicant; B is the partnership percentage of the corporate member of the partnership applicant. (3) Where the corporate member is a limited partner, the tax credit amount specified on an APITC certificate issued to the corporate member is the lesser of (a) the amount calculated using the following formula: A x B where A is the notional credit of the partnership applicant; B is the partnership percentage of the corporate member of the partnership applicant, and (b) the corporate member’s at‑risk amount. AR 180/2024 s10 Tax credit amount for corporate member of a member of partnership applicant 5.3 (1) This section applies to determine the apportionment of the tax credit amount referred to in section 69.8(1.1) of the Act to a corporate member of a member of a partnership applicant. (2) Where the member of the partnership applicant is not a limited partner and the corporate member of the member is not a limited partner, the tax credit amount specified on an APITC certificate issued to the corporate member is the amount calculated using the following formula: A x C x D where A is the notional credit of the partnership applicant; C is the partnership percentage of the member of the partnership applicant of which the corporate member is a member; D is the partnership percentage of the corporate member of the member of the partnership applicant. (3) Where the member of the partnership applicant is not a limited partner and the corporate member is a limited partner of the member of the partnership applicant, the tax credit amount specified on an APITC certificate issued to the corporate member is the lesser of (a) the amount calculated using the following formula: A x C x D where A is the notional credit of the partnership applicant; C is the partnership percentage of the member of the partnership applicant of which the corporate member is a member; D is the partnership percentage of the corporate member of the member of the partnership applicant, and (b) the corporate member’s at‑risk amount. (4) Where the member of the partnership applicant is a limited partner and the corporate member is not a limited partner of the member of the partnership applicant, the tax credit amount specified on an APITC certificate issued to the corporation is the amount calculated using the following formula: E x D where E is the lesser of (a) the amount calculated using the following formula: A x C where A is the notional credit of the partnership applicant; C is the partnership percentage of the member of the partnership applicant of which the corporate member is a member, and (b) the member’s at‑risk amount; D is the partnership percentage of the corporate member of the member of the partnership applicant. (5) Where the member of the partnership applicant is a limited partner and the corporate member is a limited partner of the member of the partnership applicant, the tax credit amount specified on an APITC certificate issued to the corporate member is the lesser of (a) the amount calculated using the following formula: E x D where E is the lesser of (i) the amount calculated using the following formula: A x C where A is the notional credit of the partnership applicant; C is the partnership percentage of the member of the partnership applicant of which the corporate member is a member, and (ii) the member’s at‑risk amount; D is the partnership percentage of the corporate member of the member of the partnership applicant, and (b) the corporate member’s at‑risk amount. AR 180/2024 s10 Serving notice 6 Any notice that must be issued by the Minister under the Act may be given or served by email to the last email address provided to the Minister by the person being served or given notice, or by registered mail to the last mailing address provided to the Minister by the person being served or given notice. Expiry 7 For the purpose of ensuring that this Regulation is reviewed for ongoing relevancy and necessity, with the option that it may be repassed in its present or an amended form following a review, this Regulation expires on March 31, 2028. Transitional 7.1 (1) In this section, (a) “amended Act” means the Investing in a Diversified Alberta Economy Act as it reads on the coming into force of this section; (b) “amended Regulation” means this Regulation as it reads on the coming into force of this section; (c) “former Act” means the Investing in a Diversified Alberta Economy Act as it read immediately before the coming into force of this section; (d) “former Regulation” means this Regulation as it read immediately before the coming into force of this section. (2) Subject to this section, the amended Act and the amended Regulation apply to (a) an eligible corporation that applied for a conditional approval letter before the coming into force of this section but has not been issued a conditional approval letter, (b) an eligible corporation that applied for an APITC certificate before the coming into force of this section but has not been issued an APITC certificate, and (c) an eligible corporation that has been issued an APITC certificate but has not made a deduction in respect of the APITC certificate under the Alberta Corporate Tax Act . (3) Subject to subsections (4) and (5), where an eligible corporation applied for a conditional approval letter or an APITC certificate under the former Act, (a) the eligible corporation is deemed to be an eligible applicant under section 69.2(a) of the amended Act, (b) if a conditional approval letter was issued to the eligible corporation under the former Act, it is deemed to have been issued to the eligible applicant under section 69.4(3) of the amended Act, (c) if a proposed investment plan was approved under the former Act, it is deemed to have been approved under the amended Act, (d) if an APITC certificate was issued to the eligible corporation under the former Act, it is deemed to have been issued to the eligible applicant under section 69.7(3) of the amended Act, and (e) the provisions in the amended Act and amended Regulation apply. (4) Subsection (5) applies where (a) 2 or more eligible corporations under the former Act were members of the same partnership, (b) each corporation was issued a separate conditional approval letter under the former Act, and (c) the conditional approval letters referred to in clause (b) were for the same eligible value‑added agricultural activity. (5) Within 6 months of the coming into force of this section, any one of the eligible corporations referred to in subsection (4) may make a request to the Minister to have the partnership, rather than the eligible corporations, become a partnership applicant under the amended Act. (6) An eligible corporation that makes a request under subsection (5) must provide with the request all of the information required by section 2.1 of the amended Regulation. (7) The Minister, on receiving a request under subsection (5) and on determining that all the relevant requirements of the amended Act and amended Regulation are met, may (a) cancel all of the conditional approval letters issued under the former Act to the eligible corporations, (b) issue a conditional approval letter to the partnership applicant under the amended Act, (c) determine the appropriate date of the new conditional approval letter, and (d) approve the proposed investment plan submitted under the former Act as an approved investment plan under the amended Act, with or without modification. AR 180/2024 s11 Coming into force 8 This Regulation comes into force on the coming into force of section 13(2) of the Financial Statutes Amendment Act, 2023 .