Direct Equity Tax Credit
NL, Canada
Tax credit for Newfoundland and Labrador investors
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|maxCount
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|timelineUnspecified
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Agriculture, forestry, fishing and hunting
- Manufacturing
- Information and cultural industries
grant_single|grantors
- Government of Newfoundland and Labrador
grant_single|status
grant_card_status|open
grant_single_labels|preview
Tax credit of 20% (North East Avalon region) or 35% (other regions) for individuals and corporations who invest as shareholders in Newfoundland and Labrador small businesses for start-up, modernization and growth.
grant_single_labels|terms_and_conditions
The Direct Equity Tax Credit program in Newfoundland and Labrador offers tax incentives to stimulate direct investments in eligible local businesses. The program is structured to provide tiered tax credit rates depending on the geographic location of the business's activities within the province.
- Offers a 35% tax credit for qualifying activities undertaken outside the North East Avalon, and a 20% tax credit for those within the North East Avalon, with pro-rata credit for operations in both areas.
- The program allows for a maximum annual tax credit of $50,000 per eligible investor, with options to carry forward unused credits for seven years or carry back for three years. However, carry back is restricted for specific prior fiscal years.
- The tax credit is non-refundable and aligns with specific fiscal stipulations for individual and corporate investors regarding the timing of claims.
- Companies are limited to raising a maximum of $3,000,000 per offering or project through this program.
- Eligible shares must remain non-redeemable for a period of five years after issuance, subject to penalty for early redemption.
grant_single_labels|projects
The Direct Equity Tax Credit program is aimed at encouraging investment in small businesses engaged in emerging and growing sectors within Newfoundland and Labrador. The initiatives must be focused on areas that contribute to economic development and technological advancement in the province.
- Technology-related projects.
- Research and development initiatives.
- Aquaculture projects aimed at industry growth.
- Forestry and agrifoods development.
- Manufacturing and processing advancements.
- Projects targeting import replacement and export enhancement.
- Tourism-related business initiatives.
- Development within the cultural industries sector.
grant_single|admissibleProjectsExample
$ 61,250
Expand a local organic farm to increase production and create jobs
$ 87,500
Start a renewable energy company focusing on wind energy solutions
$ 45,500
Develop a new eco-friendly packaging solution for local businesses
$ 87,500
Modernize a community-based health clinic with advanced equipment
$ 52,500
Launch a sustainable clothing line that employs local artisans
$ 52,500
Establish a tech startup focused on AI-based health diagnostics tools
grant_single_labels|admissibility
The eligibility criteria for a company to qualify for the Newfoundland and Labrador Direct Equity Tax Credit are focused on corporate structure, economic activity, and resource allocation.
- The company must be a Canadian controlled corporation and not publicly traded.
- The company must have a permanent establishment in Newfoundland and Labrador.
- The company must have less than $20 million in assets, including associated corporations.
- The company must utilize all of the capital raised from the specified issuance within the province.
- The company must have no more than 50 full-time equivalent positions.
- The company must have at least $25,000 of either or both shareholder equity and shareholder loans before applying for certification.
- The company must be engaged in and utilize funds for qualifying activities, such as technology, research and development, aquaculture, forestry and agrifoods, manufacturing and processing, export/import replacement businesses, tourism, and cultural industries.
- The company must not be engaged in prohibited activities such as wholesale, retail, food and beverage services, personal and professional services, real estate, oil and gas development, mineral resource exploration, and other activities not aligned with the program's objectives.
grant_eligibility_criteria|who_can_apply
The Newfoundland and Labrador Direct Equity Tax Credit targets small businesses in specific growth areas of the economy. Eligible companies engage in activities such as technology, research and development, aquaculture, and others.
- Technology
- Research and Development
- Aquaculture
- Forestry and Agrifoods
- Manufacturing and Processing
- Export / Import Replacement Businesses
- Tourism
- Cultural Industries
grant_eligibility_criteria|who_cannot_apply
This grant program excludes certain companies and industries based on their primary business activities or intended use of the funds. These exclusions are designed to ensure alignment with the strategic economic objectives outlined by the program.
- Companies primarily engaged in wholesale or retail activities.
- Businesses offering food and beverage services.
- Entities providing personal and business services, professional practices, and trades.
- Companies involved in real estate marketing and development.
- Organizations in oil and gas development and production.
- Mineral resource exploration companies.
- Firms in financial services.
- Businesses focused on fish harvesting and primary fish processing, except processing of underutilised species as designated by the Minister.
- Any other business activity not aligned with the program's spirit and intent, as determined by the Minister.
grant_eligibility_criteria|eligible_expenses
The Direct Equity Tax Credit program in Newfoundland and Labrador encourages investment in small business initiatives within growing economic sectors. The eligible projects focus on activities that contribute to economic development and diversification in the region.
- Engagement in technology-related businesses.
- Pursuing research and development initiatives.
- Investments in aquaculture enterprises.
- Development activities in forestry and agrifoods.
- Manufacturing and processing operations.
- Export businesses and import replacement activities.
- Tourism-related projects.
- Cultural industry initiatives.
grant_eligibility_criteria|zone
This grant is aligned to boost economic activities across Newfoundland and Labrador, specifically targeting regions outside of the North East Avalon. Companies in these areas benefit from a higher tax credit rate to stimulate growth in emerging industries.
- Bauline
- Conception Bay South
- Flatrock
- Logy Bay-Middle Cove-Outer Cove
- Paradise
- Petty Harbour
- Portugal Cove-St Philip’s
- Pouch Cove
- Torbay
- Mount Pearl
- St. John’s
grant_single_labels|criteria
There are evaluation and selection criteria for the Direct Equity Tax Credit Program. The criteria include but are not limited to the following:
- Demonstrated potential for job creation and economic diversification
- Evidence of sound business planning and financial stability
- Commitment to the Province's economic development goals
- Alignment with strategic industry sectors
grant_single_labels|register
Here are the steps to submit an application for this grant:
- Step 1: Pre-Approval of Eligibility
- Verify that your business meets all the eligibility criteria, such as being a Canadian controlled corporation with a permanent establishment in Newfoundland and Labrador, and engaging in qualifying activities.
- Prepare all necessary documents for pre-approval, including financial statements, tax returns, and descriptions of proposed activities.
- Submit these documents to the Department of Finance for pre-approval of your eligibility to offer shares for the tax credit.
- Step 2: Application for Certification
- Gather additional required information, including the names and addresses of all directors and a copy of the certificate of incorporation.
- Prepare detailed descriptions of the business activities and proposed use and locations for fund utilization.
- Submit the complete application package to the Department of Finance, including all previously gathered documents and any other information that may be required by the Minister.
- Step 3: Certification Validity and Fundraising
- Once your corporation is certified, ensure you issue shares during the valid certification period of three months (any extension needs Minister’s approval).
- Adhere to the specified limits and requirements regarding the share issuance as detailed in the certification.
- Step 4: Receiving Tax Credit Receipts
- After completing the share issuance, submit appropriate documentation to the Department of Finance to receive tax credit receipts.
- Provide these receipts to investors for their income tax returns (T1 or T2).
- Step 5: Ongoing Compliance and Reporting
- Submit the required financial statements, including an independent auditor's statement, to confirm good standing and adherence to the program’s regulations.
- Supply detailed status reports of shareholdings and directors as requested for five years following the share issuance.
grant_single_labels|otherInfo
Here are additional relevant details for this grant:
- The tax credit is available to individual investors for shares purchased during the calendar year or within 60 days after year-end for carry-back purposes.
- Tax credit may be carried forward for up to seven years or carried back for three years, with specific restrictions applying to individuals and corporate investors based on fiscal years.
- Eligible businesses must not redeem eligible shares within five years after issuance, else a penalty is levied.
- Certification is valid for three months with an option for extension by the Minister.
- Investors must submit tax credit receipts with their tax returns to claim the credit.
- An independent auditor's statement is required for businesses to confirm compliance and good standing.
- Eligible businesses must provide detailed reports on shareholdings and director information for five years post issuance.
