Labour-Sponsored Venture-Capital Tax Credit
Highlights
This program is designed specifically for small and medium-sized businesses in Nova Scotia. It offers a unique opportunity to secure equity financing through investments in Labour-Sponsored Venture Capital Corporations (LSVCCs). By participating, you can attract capital that helps create and maintain employment within your business.
Why Apply?
- Tax Credit: Receive a personal income tax credit of up to $2,000 annually.
- Investment Flexibility: Investments can be made within the calendar year or within 60 days of the taxation year-end.
- Long-Term Benefits: Investors are required to hold the investment for at least 8 years, ensuring stable, long-term support for your business.
What's in it for You?
- Equity Financing: Gain access to funds that can be used for growth and expansion.
- Support from Trade Unions: Benefit from the backing of trade unions, which sponsor these corporations to assist eligible businesses.
- No Refunds or Carry Forwards: The tax credit is not refundable and cannot be carried forward, making it a straightforward benefit for the current tax year.
Qualifying for this program is straightforward, and it provides a valuable financial boost to help your business thrive.
Financing Details
Type of Financing: Tax Credit
Repayment Terms and Interest Rates:
- No repayment terms or interest rates apply, as this is a tax credit.
Eligible Expenses:
- Investments in newly issued common voting shares of the corporation.
- Shares must be non-redeemable, non-convertible, and unrestricted in profit sharing or participation upon dissolution.
Use of Funds:
- Funds cannot be used for shares that are eligible for any other tax credit or deduction under the Income Tax Act, except for RRSP purposes or a federal LSVCC tax credit.
Fees:
- No fees are associated with this tax credit program.
Qualifications
- Must be a small or medium-sized business.
- Must be located in Nova Scotia.
- Must be a corporation sponsored by a trade union.
- Must be involved in creating and maintaining employment.
- Must raise venture capital by issuing shares to the public.
Capital raised must be invested in eligible businesses through equity financing or subordinate debt obligations.
Disqualifications:
- Businesses not located in Nova Scotia.
- Corporations not sponsored by a trade union.
- Businesses not involved in creating and maintaining employment.
- Businesses that do not raise venture capital by issuing shares to the public.
- Capital not invested in eligible businesses through equity financing or subordinate debt obligations.
Description
This program offers your business a great chance to grow by providing equity financing. You can receive a tax credit of up to $2,000 when you invest in registered labour-sponsored venture capital corporations (LSVCCs). This means you can reduce your personal income tax by investing in these corporations.
The money raised by these LSVCCs is used to help small and medium-sized businesses like yours. The funds can be used for various business needs, such as expanding operations or developing new products. This can be a crucial boost for your business, helping you create and maintain jobs.
Key conditions include holding the investment for at least 8 years. If you sell the investment before this period, you may need to repay the tax credits. This program is a valuable opportunity to secure funding and reduce your tax burden while supporting the growth of your business.
Program Steps
Gather Required Documentation: Prepare the necessary documents to support your application. These include:
- Business financial statements
- Business plan
- Details of intended use of funds
- Proof of Nova Scotia residency for investors
- Valid reasons for investment beyond obtaining the tax credit
Complete the Application Form: Fill out the application form provided by the program. Ensure all sections are completed accurately.
Submit the Application: Submit the completed application form along with the required documentation to the appropriate department or online portal.
Review and Verification: The department will review your application and verify the submitted documents. They may contact you for additional information or clarification.
Approval and Issuance of Shares: Once approved, the program will issue shares to the investors. Ensure that these shares meet the criteria of being newly issued, common voting shares that are non-redeemable, non-convertible, and unrestricted in profit sharing or participation upon dissolution.
Maintain Investment: Investors are required to hold the investment for at least 8 years. If the investment is disposed of within this period, the investor may need to repay the tax credits earned.
Monitor and Report: Keep track of your investment and ensure compliance with all program requirements. Report any changes or issues to the relevant authorities as needed.