North of 60 Blog

What’s the BIP?

The Government of the Northwest Territories (GNWT) has updated its Business Incentive Policy (BIP). The BIP is a way for the GWNT to recognize and account for higher costs associated with operating businesses in the Northwest Territories (NWT). The BIP applies a “bid adjustment” to qualified NWT businesses: essentially a 15% to 20% reduction on bid prices submitted by NWT businesses when they’re compared to non-NWT businesses. The purpose of the policy is to level the playing field for NWT companies competing with southern companies.

The BIP isn’t new; it’s been around for nearly 40 years. In 2008 the GNWT was considering getting rid of it altogether, but eventually chose to keep it.^[i] The BIP was reviewed extensively in 2021, and a report on procurement policies and practices was released in July, 2023.^[ii] In October, 2023, the GNWT revised the BIP, but they didn’t release it publicly until March, 2024. You can find the new BIP here.

The BIP is Largely Unchanged

Many of the eligibility requirements for BIP registration remain unchanged. To register for the new BIP, every applicant must comply with the legal requirement to carry on a business in the NWT (just like the old BIP). This includes holding a current business licence from either a municipal corporation or the GNWT. To be BIP-eligible, corporations and co-operative associations still require at least 51% of voting shares to be beneficially owned by NWT Residents. Partnerships still require the majority interest in the partnership to be owned by NWT Residents. Sole proprietors must still be a NWT Resident. None of these eligibility requirements have changed.

The GNWT Department of Industry, Tourism and Investment (ITI) manages the BIP, and publishes guidelines to help businesses better understand eligibility, applications and compliance with the BIP. The BIP guidelines posted on ITI’s website are not updated (as of this writing) to align with the new BIP, although new guidelines are being worked on.

Although the new BIP looks a lot like the old BIP there are a few important changes to be aware of.

What’s New in the BIP?

NWT Resident Requirement Changed from 12 Months to 6 Months - The first change is how a NWT Resident is verified. A NWT Resident must now be ordinarily resident in the NWT for only six months (that’s changed from twelve months) and must, if requested, provide documentation to support residency.

Physical Location Must Be for Primary Purpose of Operating Business - In the new BIP there are more specific physical location requirements for BIP applicants. An applicant must maintain a place of business year-round in the NWT, with a physical address for the “primary purpose of operating the business”.^[iii] The new BIP includes a physical address that is a portion of a residential space, which is good news for home-based businesses.^[iv] The requirement to have been operating at the location prior to the date of the BIP application has been removed.

No More Schedule 3 - Perhaps the biggest change to the BIP is the removal of the “Schedule 3” companies. Schedule 3 was a list of 54 “Majority Non-Resident Owned Businesses” that automatically qualified for the BIP. Schedule 3 included Wal-Mart Canada Corp., Loblaws Inc., Finning Canada, Atco Frontec Ltd., McLennan Ross LLP and Clark Builders.

A New BIP Eligibility Category - Despite the removal of Schedule 3, there is a new eligibility category (at Section 6(2)(b)(v)) for companies that are majority non-resident owned businesses. BIP applicants that do not meet the requirement of at least 51% voting shares beneficially owned by NWT Residents can still qualify if they are:

“A for-profit corporation, co-operative association, partnership or sole proprietorship with NWT Residents as the majority of employees conducting its operations within the Northwest Territories, and has an NWT Resident as the manager overseeing its Northwest Territories operations.”

Companies applying under this category must still comply with the legal requirements to carry on business in the NWT, maintain a place of business year round in the NWT for the primary purpose of operating the business, and be subject to the NWT Income Tax Act, as well as holding the relevant municipal or territorial business licence.

It’s not clear how a majority non-resident owned business will go about establishing that the majority of employees conducting its operations within the NWT are NWT residents. ITI has indicated that a statutory declaration will be sufficient to establish residency requirements. Once the updated BIP guidelines are published, there may be more clarity to this process.

No Indigenous Procurement Policy, Yet

The July, 2023 report on procurement policies set out an implementation plan for an Indigenous Procurement Policy, which includes a strong commitment to collaboration with the NWT Council of Leaders and Modern Treaties and Self Government Partners to explore ways “to promote the inclusion of NWT Indigenous businesses and individuals more effectively in GNWT procurement policies”.^[v] This process has been ongoing since 2021, and includes discussions around the definition of “Indigenous businesses” for the purposes of GWNT policy, and “introduction of [a] potential policy mechanism”.^[vi] No policy details or updates have been released. The Premier told the Legislative Assembly that there are “a lot of voices in the room so it’s taking some time, but we’ll get there”.^[vii]

^{[i] https://www.cbc.ca/news/canada/north/n-w-t-government-to-scrap-business-incentive-policy-1.742736}

^{[ii] Government of Northwest Territories, “Report on the Review of GNWT Procurement Policies and Practices” (July 2023), online (pdf): Government of Northwest Territories Finance <fin.gov.nt.ca/sites/fin/files/resources/procurement_review_report-final-230724-benjulie.pdf>.}

^{[iii] Business Incentive Policy 63.02, Government of the Northwest Territories (5 October 2023), online (pdf): Government of the Northwest Territories <iti.gov.nt.ca/sites/iti/files/1358-GNWT-ITI-BIP-ENG_Proof_0.pdf> at 6(2)(a)(i).}

^{[iv] Business Incentive Policy 63.02, Government of the Northwest Territories (5 October 2023), online (pdf): Government of the Northwest Territories <iti.gov.nt.ca/sites/iti/files/1358-GNWT-ITI-BIP-ENG_Proof_0.pdf> at 6(2)(a)(i).}

^{[v] Supra, note 2 at 11.}

^{[vi] Northwest Territories, Legislative Assembly, Hansard, 20th Assembly, HN240208 (8 February 2024) at Member’s Statement 47-20(1): Government of the Northwest Territories Indigenous Procurement Policy.}

^{[vii] Ibid at Question 32-20(1).}