In an effort to spur economic growth and create jobs, Newfoundland and Labrador created the Economic Diversification and Growth Enterprises program, providing incentives for companies to build and expand in the province, particularly stressing rural investment. Businesses that qualify for EDGE get rebates on several different taxes and can be eligible for nearly free land. If you have accounting clients looking to grow their businesses in Newfoundland and Labrador, you can help them take advantage of EDGE.
To qualify for EDGE in Newfoundland and Labrador, a business must meet all of the following criteria:
- Demonstrate its capacity to create and sustain at least 10 permanent, full-time jobs in the province
- Plan to invest a minimum of $300,000 into the region or generate at least $500,000 in yearly sales
- Would not choose the area to build or expand (or does not have the means to reasonably do so) absent EDGE incentives
- Would not gain an unfair advantage over existing businesses in the region due to EDGE incentives
- Business activities can provide a net positive impact on the local or provincial economy
For clients seeking approval for EDGE, part of your role as their accountant is to help them formulate a business plan that clearly demonstrates they meet all of the program’s criteria.
Businesses approved for the program enjoy the following benefits:
- A 100 percent rebate on provincial corporate income taxes for 10 years (15 years if the business builds or expands outside the northeast Avalon area)
- A 50 percent federal corporate income tax rebate for the same periods
- A declining partial rebate on both provincial and federal taxes for the five-year period immediately following
- A 100 percent property tax rebate for the same periods, plus a five-year declining rebate, if the business builds or expands in a municipality participating in EDGE
- If the business requires land to grow or expand, access to unsecured public land for as little as $1
How to Help Your Clients Apply
The process of applying for EDGE is pretty involved, and that’s where you, the accountant, can offer assistance and give your clients the best chance of success. To apply, a business must submit two forms: the official EDGE application form and a confidential statement of personal net worth.
The application asks standard questions about the business such as its contact information, sector, purpose of funding, revenues, debts, and so forth. It also requests a host of supporting documentation, much of it financial, including a project budget, current balance sheet and income statement, cash flow statement, and future income projections. Also, the application requires a detailed business plan.
Any errors or inconsistencies in the supporting documentation could lower your client’s chance of approval, perhaps substantially, so it’s incumbent upon you to walk your client through the process, ensuring the application is completed diligently.
The EDGE program is a boon to businesses looking to expand in Newfoundland and Labrador, offering land and long-term tax incentives. By educating yourself and your employees on the program, you can help your clients apply and get approved.