Rental Housing Construction Incentive Regulation

Rental Housing Construction Incentive Regulation, M.R. 65/2025 The Income Tax Act , C.C.S.M. c. I10 Regulation 65/2025 Registered August 1, 2025 bilingual version (HTML) Table of Contents Section DEFINITIONS 1 Definitions ELIGIBILITY FOR TAX CREDIT 2 Eligible rental housing projects QUALIFYING ENTITIES 3 Qualifying entities TAX CREDIT — CAPITAL COSTS 4 Capital costs TAX CREDIT — AFFORDABLE UNITS 5 What is an affordable unit? 6 Application to occupy affordable unit 7 Approval for tenant to occupy affordable unit 8 Other approved individuals CERTIFICATES OF ELIGIBILITY 9 Application for certificate of eligibility 10 Criteria for certificate of eligibility 11 Maximum tax credits for all entities 12 Terms and conditions of certificate of eligibility 13 Assignment of certificate 14 Recordkeeping TAX CREDIT CERTIFICATES 15 Minister may issue tax credit certificate RECOVERY OF AMOUNTS IF NUMBER OF AFFORDABLE UNITS REDUCED 16 Amount recoverable RULES RESPECTING PARTNERSHIPS AND JOINT VENTURES 17 Partnerships and joint ventures — qualifying entities 18 Designated member of partnership or joint venture 19 Tax credit certificates to members of partnerships and joint ventures 20 Tiered partnerships GENERAL MATTERS 21 Amending certificates 22 Minister may extend time DEFINITIONS Definitions 1 The following definitions apply in this regulation. "Act" means The Income Tax Act . («  Loi  ») "minister" means the minister responsible for the administration of The Housing and Renewal Corporation Act or a person designated by that minister to perform certain duties assigned to the minister under section 10.7 of the Act or this regulation. (« ministre ») "owner" , in relation to a rental housing project or residential rental unit, means the beneficial owner of the project or unit, and "owns" refers to their ownership of the project or unit. (« propriétaire ») "rent" means the amount of money paid or other value given by or on behalf of a tenant to a landlord for the right to occupy a residential rental unit and for the use of common areas, services and facilities, accommodations or other things relating to the use, occupation or enjoyment of the rental unit, other than charges for (a) a parking space; and (b) tenant services as defined in The Residential Tenancies Act . (« loyer ») "tax credit" means the rental housing construction incentive under section 10.7 of the Act. (« crédit d'impôt ») ELIGIBILITY FOR TAX CREDIT What is an eligible rental housing project? 2(1) For the purpose of the tax credit, a rental housing project (a) contains at least four residential rental units; and (b) is not any of the following: (i) a facility consisting of vacation homes occupied for a seasonal or temporary period, (ii) a facility occupied for the purpose of receiving in-patient or resident-based therapeutic or rehabilitative care, (iii) a facility that is a temporary shelter for individuals in need, (iv) a hospital or a hospice for individuals in the late stages of a life-threatening illness, (v) a personal care home designated under the regulations made under The Health Services Insurance Act , (vi) a residential care facility that has been licensed or issued a letter of approval under the regulations made under The Social Services Administration Act , (vii) a facility that provides living accommodation in association with a religious denomination on premises occupied solely by the denomination's clergy or employees, by a religious order or for religious instructional purposes, (viii) a facility occupied by employees of one or more businesses who may occupy the facility only while they are employed by the business or businesses. Including suites as residential rental units 2(2) For the purpose of determining the number of residential rental units in a rental housing project, a single room or series of rooms is a residential rental unit if the room or series of rooms (a) has its own keyed entry door; (b) contains sleeping facilities; (c) operates under a single tenancy that also provides access to a bathroom and a kitchen or kitchenette; and (d) is usually rented or leased for a period of not less than one month. QUALIFYING ENTITIES Which other entities are included as qualifying entities? 3 For the purpose of the tax credit, in relation to a rental housing project, (a) an individual, including a trust, is a qualifying for-profit entity; and (b) a corporation that is exempt from tax under paragraph 149(1)⁠(d.5) (municipally owned or First Nation-owned corporations) or (d.6) (subsidiaries of municipally owned or First Nation-owned corporations) of the federal Act for the period that includes the day that the project becomes available for use is a qualifying non-profit entity for the project. TAX CREDIT — CAPITAL COSTS What is the percentage of the capital costs that is used to calculate the tax credit? 4(1) The prescribed percentage of the capital costs of an eligible rental housing project is 8%. What is the capital cost of a rental housing project? 4(2) The capital cost of an eligible rental housing project of a qualifying entity is the amount that would be its capital cost if the amount of any government assistance received or receivable by the entity in relation to the project were deducted from the capital cost otherwise determined. What is government assistance? 4(3) For the purpose of subsection (2), government assistance is assistance from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or any other form of assistance, other than the tax credit. Cost of land excluded 4(4) For certainty, land acquisition costs are not to be included in the calculation of the capital cost of an eligible rental housing project. TAX CREDIT — AFFORDABLE UNITS Information Note A qualifying entity is entitled to an additional rental housing construction incentive in relation to a rental housing project if the project contains affordable units. A residential rental unit may qualify as an affordable unit if the monthly rent for the unit does not exceed a set amount and the tenants of the unit meet certain criteria. Sections 5 to 7 deal with these matters. What is an affordable unit? 5 For the purpose of the tax credit, a residential rental unit is an affordable unit if (a) the monthly rent does not exceed the applicable monthly rental rate set annually by The Manitoba Housing and Renewal Corporation under its affordable housing rental program; and (b) any one of the following applies: (i) at least one of the unit's occupants ordinarily occupied the unit on the day this regulation came into force, (ii) the minister has approved the unit's occupants under subsection 7(1) to occupy an affordable unit, (iii) at least one of the unit's occupants is approved to occupy the unit under section 8, (iv) the unit is vacant and available for use. Individual may apply for approval to occupy unit 6(1) In relation to an affordable unit, an individual who will ordinarily occupy the unit may apply to the minister for approval to occupy the unit. The individual may apply for themselves and all the other individuals who will occupy the unit with them. Application 6(2) The individual making the application must (a) apply in the form and manner approved by the minister; and (b) provide the information and records required by the minister. Minister may approve individual to occupy affordable unit 7(1) The minister may approve an application for one or more individuals to occupy an affordable unit if the minister is satisfied that (a) no individual who will occupy the unit is related to or affiliated with the owner of the unit; and (b) the household income of the applicant is not greater than the applicable annual income limit set annually by The Manitoba Housing and Renewal Corporation under its affordable housing rental program. Determining household income 7(2) For the purpose of clause (1)⁠(b), the household income of the applicant is, subject to subsection (3), the total of the annual incomes of the applicant and the other individuals, if any, who will ordinarily occupy the unit with the applicant. For this purpose, the annual income is the income for the year of an individual for the taxation year that ended on (a) December 31 of the preceding calendar year if the individual's income for this year has been assessed at the date of the application; or (b) December 31 of the second preceding calendar year in any other case. Excluded incomes 7(3) The household income of the applicant does not include the annual income of any of the following individuals: (a) an individual who is under the age of 18; (b) an individual who is enrolled in a course of study that the minister is satisfied is a full-time course of study; (c) a live-in caregiver who is not related to the individual receiving care. Minister may dispense with income requirement 7(4) If the minister is satisfied that the household income of the applicant cannot reasonably be determined, the minister may dispense with the requirement in clause (1)⁠(b). Other approved individuals 8 An individual who begins to occupy an affordable unit with another individual is approved to occupy the unit if the other individual (a) occupied the unit on the day this regulation came into force; (b) was approved by the minister under subsection (1) to occupy an affordable unit; or (c) began occupying the unit with a third individual who is an individual described in clause (a) or (b) in relation to the unit. CERTIFICATES OF ELIGIBILITY Application for certificate of eligibility 9(1) To receive the tax credit for an eligible rental housing project, a qualifying entity must apply to the minister for a certificate of eligibility. When must the entity apply? 9(2) The application must be made before 90 days after the later of (a) the day that a building permit was issued for the project; and (b) the day this regulation comes into force. Criteria for certificate of eligibility 10 The minister may issue a certificate of eligibility to a qualifying entity in relation to an eligible rental housing project if (a) the qualifying entity is the owner of the project; and (b) the minister is reasonably satisfied that the entity's activities will be carried out in accordance with the Act, this regulation and any other enactment. Maximum tax credits for all entities 11 The minister must not issue a certificate of eligibility for a rental housing project if issuing the certificate would result, in the opinion of the minister, in (a) the total of the tax credits for all taxation years after 2023 being greater than $176,500,000; or (b) the total of the tax credits for all taxation years after 2023 in relation to residential rental units other than affordable units being greater than $158,850,000. Terms and conditions of certificate of eligibility 12 A term and condition of each certificate of eligibility issued in relation to a rental housing project is that (a) the owner of the project must inform the minister as soon as practicable of any change that could affect a claim for the tax credit; (b) the owner must, at the time required, provide the information and reports required under the Act or section 13; (c) if the owner is a qualifying non-profit entity, the owner must remain a qualifying non-profit entity until after the tax credit certificate is issued in relation to the project; and (d) if the project includes an affordable unit, the unit must not be occupied by an individual who is related to or affiliated with the owner of the project. Assignment of certificate 13 The holder of a certificate of eligibility issued in relation to a rental housing project may assign the project's certificate of eligibility to another qualifying entity if (a) the other entity acquires the holder's interest in the project; and (b) the minister consents in writing to the assignment. Recordkeeping 14(1) The owner of an eligible rental housing project for which a certificate of eligibility has been issued or assigned must keep records in the form and containing the information that the minister considers necessary to verify a claim for the tax credit. Where and how long records to be kept 14(2) An owner required to keep records under this section in relation to an eligible rental housing project must (a) keep the records at its head office in Manitoba or at any other Manitoba location approved by the minister; and (b) retain the records for, (i) if the records are required to verify that a residential rental unit in the project is an affordable unit, 13 years after the day the certificate of eligibility is issued in relation to the project, or (ii) in any other case, the period of time that a person's records are required by the Act to be retained for the purpose of administering and enforcing the Act. Annual report 14(3) If the eligible rental housing project includes an affordable unit, the owner of the project must provide to the minister, for the taxation year in which the project becomes available for use and for each of the next nine taxation years, an annual report that includes (a) a list of the affordable units in the project; (b) the names of the occupants, as they appear in the records of the owner or the agent of the owner, of the affordable units; (c) the rent charged in relation to each affordable unit; (d) any other information requested by the minister; and (e) a statement, signed by the owner or an officer or agent of the owner, attesting to the completeness and accuracy of the information included in the report. Filing of annual report 14(4) The annual report for a taxation year must be filed with the minister not later than 60 days after the end of the taxation year. TAX CREDIT CERTIFICATES Minister may issue tax credit certificate 15 The minister may issue a tax credit certificate to the owner of an eligible rental housing project for a taxation year if the owner (a) applies, not later than 120 days after the end of the taxation year, for the certificate in the form and manner approved by the minister; (b) provides any information and records requested by the minister; and (c) holds a certificate of eligibility in relation to the project. RECOVERY OF AMOUNTS IF NUMBER OF AFFORDABLE UNITS REDUCED Amount recoverable 16 If the number of affordable units in an eligible rental housing project is reduced before the end of the ninth taxation year following the taxation year in which the project becomes available for use, the amount that is recoverable from the owner of the project at the end of a taxation year is the positive amount, if any, determined by the following formula: A − B − C In this formula, A is the total of the tax credits received by a qualifying entity under clause 10.7(2)⁠(b) or subsection 10.7(4) of the Act in relation to the project; B is the total of the tax credits that would have been received under those provisions had the project not contained more affordable units at the end of any previous taxation year than it did at the end of the taxation year; C is the total of the amounts recoverable under this section at the end of a previous taxation year in relation to the project. RULES RESPECTING PARTNERSHIPS AND JOINT VENTURES Partnerships and joint ventures — qualifying entities 17(1) A partnership or joint venture that owns an eligible rental housing project is deemed to be (a) a qualifying for-profit entity in relation to the project for the purpose of (i) determining the tax credit payable in relation to the project under subsections 10.7(2) to (4) of the Act, and (ii) applying for and being issued a certificate of eligibility under subsection 10.7(6) of the Act; and (b) for the purpose of subsections 10.7(11) and (12) of the Act, the person to whom a tax credit was paid for the project and from whom an amount is recoverable. Partnership or joint venture is non-profit entity 17(2) A partnership or joint venture is deemed for the purpose of clause (1)⁠(a) to be a qualifying non-profit entity if qualifying non-profit entities hold interests in the entity that (a) entitle them to be allocated at least 95% of income or loss of the entity; and (b) have at least 95% of the fair market value of all the interests in the entity. Designated member of partnership or joint venture 18 A partnership or joint venture that is the qualifying entity in relation to an eligible rental housing project must designate one of its members to act on behalf of the entity in relation to the tax credit. The minister is entitled to rely on a member's representation that they are authorized to act on behalf of the entity. Tax credit certificates to members of partnerships and joint ventures 19(1) If the owner of an eligible rental housing project is a partnership or joint venture, the minister may issue the tax credit certificates in relation to the project to the members of the partnership or joint venture. Partnerships and joint ventures 19(2) When applying for tax credit certificates for the members of a partnership or joint venture, the designated member must provide to the minister (a) the name of each member who is entitled to be allocated income from the project and the amount that is reasonably considered to be the member's portion of the tax credit; (b) the taxation year of the member that includes the day that the project became available for use and, if applicable, the next nine taxation years; and (c) any other information required by the minister. When information must be provided 19(3) The designated member of a partnership or joint venture that holds a certificate of eligibility in relation to a rental housing project must apply for tax credit certificates (a) not later than 120 days after the day the project becomes available for use; and (b) if the entity is a qualifying for-profit entity and the project includes affordable units, not later than 90 days after each of the next nine anniversaries of the day that the project became available for use. Tiered partnerships 20 For the purpose of sections 17 to 19, an individual, including a trust, or a corporation that is a member of a partnership that is a member of another partnership, is deemed to be a member of that other partnership. GENERAL MATTERS Amending certificates 21 The minister may revoke or amend a certificate of eligibility or a tax credit certificate if there is a material change, after the day the certificate was issued, in the qualifying entity or the eligible rental housing project that affects a claim for the tax credit. Minister may extend time 22 When this regulation provides that an entity is to do anything not later than a day, the minister may, before or after the day, extend the time period. The minister may require the entity to apply in a form and manner approved by the minister for the extension of the time period.