Budget Backgrounder: Enterprise Zone Advantages

The Nova Scotia government has created a rural advantage for business in Nova Scotia. Finance Minister Don Downe today outlined details of Nova Scotia's new Enterprise Zones, which offers enhanced incentives for doing business in rural areas.

"Our economic performance is hitting its stride, but we must spread business development opportunities across the province," said Mr. Downe. "I believe the Enterprise Zones offer attractive incentives that will help us do that. It builds on incentives that are already offered provincewide."

Enterprise Zones includes communities outside the Halifax-Dartmouth, Bedford-Lower Sackville area. Doing business inside "zone" communities has advantages, including enhanced tax incentives and investment credits that will boost efforts to develop businesses and create employment in rural areas.

FILM INDUSTRY TAX CREDIT
Rural areas of the province, for example, could be at a disadvantage in attracting film productions because of higher labour and production costs outside urban centres. The film industry tax credit will be increased to 37.5 per cent from 32.5 per cent for eligible labour expenses inside an Enterprise Zone. This measure will help rural communities receive the economic spinoffs of film production activity.

NEW SMALL BUSINESS TAX REDUCTION
Small businesses in an Enterprise Zone and eligible for the new small business tax reduction can claim this credit for two additional years -- five years in total. The Nova Scotia small business tax deduction effectively eliminates the Nova Scotia corporation income tax for the first three taxation years of a new small business. This new five-year incentive inside an Enterprise Zone will attract new small business and assist these companies in their startup phase.

EQUITY TAX CREDIT
The equity tax credit is a 30 per cent personal tax credit on investments in Nova Scotia small businesses, co-operatives and community economic development funds. To further encourage investments within an Enterprise Zone, the equity tax credit rate will increase to 35 per cent from 30 per cent for investments in zone communities. In addition, the province will guarantee up to 20 per cent of investments made in community economic development funds located in an Enterprise Zone.

LABOUR-SPONSORED VENTURE CAPITAL CORPORATIONS
Labour-sponsored venture capital corporations are required to reinvest 80 per cent of equity capital raised in the province in eligible businesses within four years. Those reinvesting in the Enterprise Zone will receive three times the credit for those investments. This means a $100,000 investment will count as $300,000 toward an investment requirement. Provincially registered labour-sponsored venture capital corporations have collectively raised more than $30 million in equity capital that must be reinvested in Nova Scotia.

"There is great potential here," said Mr. Downe. "We believe the incentives to do business inside Enterprise Zones will spark investment and job opportunities that will kick-start local economies all over Nova Scotia."