Tax Benefits

Watts Wind Energy Inc. is organized as a Community Economic Development Corporation (CEDC) to offer Nova Scotians a way to invest in local wind energy projects while offering eligible investors access to up to 65% in non-refundable provincial income tax credits as outlined in the text below.

Watts Wind Energy targets a return for its shareholders before the benefit of any tax credits that may apply. As a CEDC, investments in Watts Wind Energy by eligible investors may qualify for non-refundable provincial income tax credits of up to 65% and the investment may be RRSP eligible.

The NSETC provides non-refundable provincial income tax credits to eligible Nova Scotia residents that make an eligible investment. Up to 35 per cent of the investment made by an individual (to a maximum investment of $50,000 in one year) can be applied as a non-refundable provincial income tax credit against the investor’s Nova Scotia provincial taxes owing. In addition to the 35 per cent NSETC, investments in Watts may also be eligible for an additional 20 per cent non-refundable provincial income tax credit 5 years after investment and a further 10 per cent non-refundable provincial income tax credit 10 years after investment if additional conditions are satisfied.

Investments in Watts Wind Energy are also qualified to be held in Registered Retirement Savings Plan (RRSP) accounts, either as a new contribution or a re-allocation of existing investments within an RRSP account.

An Example

Potential tax benefits for investing in Watts Wind Energy Inc. are illustrated below.

$50,000.00	Investment (non-RRSP)
– $17,500.00	(35%) non-refundable provincial income tax credit
$32,500.00	Net Cost (non-RRSP)
– $15,000.00	If the investment is made with new money to RRSP, a deferral tax at the marginal tax rate⁽¹⁾
$17,500.00	Total immediate hypothetical net cost
– $10,000.00	(20%) non-refundable provincial income tax credit if held for ten years⁽²⁾
-$5,000.00	(10%) non-refundable provincial income tax credit if held for fifteen years⁽²⁾
$2,500.00	Total hypothetical cost of investment if held for fifteen years, subject to tax deferral (without a discount for time value of money and provided Shares maintain their value)

⁽¹⁾ For illustration, a 30% marginal rate is used and the assumption is that there is sufficient RRSP room available Please note that this results in a tax deferral, not a non-refundable provincial income tax credit. The above example may not be applicable to all investors.

⁽²⁾ The additional 20% and 10% non-refundable tax credits are subject to Watts fulfilling other conditions.