30% Tax Credit for Residents of British Columbia with Investments in Eligible Business Corporation – How you can qualify
The Province of British Columbia recognizes the fundamental role of small, B.C.-based business in diversifying and strengthening the economy and in creating new jobs. As one of the hurdles to early success for entrepreneurs is availability of venture capital, the B.C. Ministry of International Trade created the Venture Capital Program (VCP) to help foster and support innovation and economic growth.
Residents of British Columbia who make equity capital investments in registered Eligible Business Corporations (EBCs) participating in the VCP, can receive up to a 30% refundable tax credit from the Province of B.C on the full amount invested [up to a maximum rebate of $60,000.00 per individual per tax year. There is no limit for corporate investors].
How Does It Work?
Each tax year, a limited budget of available Provincial tax credits is allocated to the Venture Capital Program. Upon receiving an equity capital investment from a qualified resident of British Columbia, an EBC registered corporation must apply on behalf of the investor to the Provincial Government for tax credit certificates in the amount equal to 30% paid for the common shares in the EBC business.
As the Venture Capital Program operates on a “first-come-first-served” basis, tax credit certificates are only issued as long as the limited budget for credits remains available.
For applications made while tax credits are available, certificates in the name of the investor are sent to the submitting registered corporation. It is the responsibility of the receiving corporation to ensure certificates are distributed to their equity investors.
Investors who are the recipients of the tax credit certificates can submit them with their B.C. Provincial tax return for that same calendar year. Monies will be issued to the certificate holder regardless of taxes due, or results of the registered EBC.
What Corporations Qualify for EBC Designation?
Corporations must apply to the B.C. Ministry of International Trade Venture Capital Program for acceptance and designation as an Eligible Business Corporation. Among other requirements, corporations must:
- be incorporated under B.C.’s Business Corporations Act, or Canada’s Business Corporations Act, or be incorporated in another province and registered to carry on business in B.C.;
- maintain a permanent establishment in B.C. with at least 80% of its’ assets in B.C.
- be substantially engaged in B.C. in one or more of the 6 qualifying activities:
- Manufacturing or processing, including services directly associated with the export of value-added goods produced in British Columbia
- Destination Tourism Resort
- Research and development of proprietary technology
- Development of interactive digital new media product
- Community diversification outside of the Lower Mainland and the Capital Region
- Clean Technology
This is a summary of the EBC provisions of the Venture Capital Program only.
For more detailed information on Venture Capital Programs, please refer to information available at www.equitycapital.gov.bc.ca.