Common Questions about Manufacturing and Processing Investment Tax Credit on Used Equipment
What equipment qualifies for this program?
Any used equipment which meets the federal definition of qualified property in subsection 127(9) and 127(11) of the federal Income Tax Act and meets the definition of qualified property in subsection 7.31(1) of The Income Tax Act of Saskatchewan. This generally includes property used primarily for the purpose of manufacturing or processing goods for sale or lease. Additional details regarding eligible activities is available in the bulletin or by contacting Saskatchewan Finance.
Where do I send my application?
Any eligible used equipment purchases should be included on the application sent to Saskatchewan Finance. You should include with the application copies of the purchase invoices, financial statements, T2 Corporation income tax return and documentation verifying PST was paid on all taxable items. A cheque will be mailed directly to the corporation once the application is processed.
New manufacturing equipment purchases are also eligible for an investment tax credit. To apply for the credit, complete Schedule 402 of the T2 Corporation Income tax return. This credit will be applied directly against Saskatchewan Tax payable on the T2 return or refunded.
What if I have not paid PST on the used equipment purchased?
PST should be remitted prior to forwarding the application. However, if PST has not yet been remitted on the equipment purchased, the investment tax credit can be applied against any PST outstanding providing there is sufficient Saskatchewan Income Tax payable in the year of application to offset the investment tax credit.
My company did not pay Saskatchewan income tax in the current year. Can I still apply for a credit on the equipment purchased?
Yes. Credits should be applied for in the year the equipment was purchased regardless of taxable status. For acquisitions prior to April 7, 2006, credits can be carried back three years or forward up to ten years under both the new and used investment tax credit programs. A credit carry forward or carry back can then be requested on the application form. For acquisitions after April 6, 2006, credits are fully refundable.