Labour-Sponsored Venture-Capital Tax Credit
NS, Canada
Tax credit to support Nova Scotia SMEs
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|maxCount
grant_single|deadlines
- grant_single|closingDateJune 24, 2024
- grant_single|grantStatusClosed
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- grant_single|allIndustries
grant_single|grantors
- Government of Nova Scotia
- Finance and Treasury Board (NB)
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grant_card_status|closed
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Get a non-refundable personal tax credit of up to $2,000 when you invest in registered, labour-sponsored venture capital corporations.
grant_single_labels|projects
This program encourages investment in registered labour-sponsored venture capital corporations (LSVCCs) in Nova Scotia to stimulate economic growth. The projects eligible for funding must focus on mobilizing venture capital for small and medium-sized businesses and co-operatives.
- Issuance of newly created common voting shares by LSVCCs to raise capital.
- Investment of raised capital in eligible businesses through equity financing.
- Facilitation of economic development by backing businesses aimed at creating and maintaining employment.
- Providing financial support to businesses through subordinate debt obligations where applicable.
grant_single|admissibleProjectsExample
$ 2,000
Initiative to support indigenous artisans
$ 2,000
Acquisition of cutting-edge machinery for manufacturing purposes
$ 2,000
Creation of a local artists' marketplace
$ 2,000
Development of a community tech hub
$ 2,000
Enhancement of sustainable fishing practices
$ 2,000
Expansion of a local organic farming cooperative
grant_single_labels|admissibility
Eligibility for the Labour-Sponsored Venture-Capital Tax Credit focuses on the specific attributes and conditions pertaining to companies that seek investment through registered labour-sponsored venture capital corporations (LSVCCs).
- The company must be a small or medium-sized business or co-operative located in Nova Scotia.
- It must be deemed eligible to receive venture capital from LSVCCs for equity financing or subordinate debt obligations.
- The company must engage in activities that assist in creating and maintaining employment within the province.
- The corporation must issue newly issued common voting shares that are non-redeemable and non-convertible.
- The shares must not have eligibility for any other tax credit or deduction under the Income Tax Act, except for certain RRSP purposes or a federal LSVCC tax credit.
grant_eligibility_criteria|who_can_apply
Eligible investors for the Labour-Sponsored Venture-Capital Tax Credit are residents of Nova Scotia who are at least 19 years old and have valid reasons for making the investment beyond just obtaining the tax credit. However, the grant details do not specify additional evaluation or selection criteria for projects beyond investor eligibility and investment conditions.
grant_eligibility_criteria|zone
This tax credit program is intended for investors residing in a specific Canadian province. The geographical eligibility is limited to residents within this region, supporting local businesses and initiatives.
- Residents of Nova Scotia, Canada.
grant_single_labels|register
- Step 1: Become an Eligible Investor
- Ensure you are a resident of Nova Scotia over 19 years of age with a valid reason beyond just obtaining the tax credit for making the investment.
- Step 2: Locate a Registered LSVCC
- Identify and connect with a labour-sponsored venture capital corporation (LSVCC) that is registered under the program.
- Step 3: Invest in Eligible Shares
- Purchase newly issued common voting shares that are non-redeemable and non-convertible from the LSVCC.
- Ensure the purchased shares are not eligible for other tax credits or deductions, apart from RRSP purposes or a federal LSVCC tax credit.
- Step 4: Obtain Proof of Investment
- Receive documentation from the LSVCC confirming your investment, including necessary details about the shares purchased.
- Step 5: Claim Tax Credit
- File your income tax return and include the investment details to claim the tax credit.
- Ensure you have enough tax payable for the year to utilize the credit, as it is non-refundable and cannot be carried forward.
Apply to this program
Supporting Economic Growth Through The Labour-Sponsored Venture-Capital Tax Credit
The Labour-Sponsored Venture-Capital Tax Credit in Nova Scotia is designed to facilitate equity financing for small and medium enterprises (SMEs) by providing a personal income tax credit to individuals who invest in registered labour-sponsored venture capital corporations (LSVCCs). This program encourages investors to support local businesses while promoting job creation and retention through structured venture capital input.
Detailed Insight Into The Labour-Sponsored Venture-Capital Tax Credit
The Labour-Sponsored Venture-Capital Tax Credit is an integral component of Nova Scotia's efforts to bolster the local economy through strategic financial incentives for individual investors. By providing up to $2,000 in annual tax credits, this initiative appeals primarily to Nova Scotia residents over the age of 19 who seek to make meaningful investments in the community, aligned with economic development objectives beyond merely acquiring the tax benefit. The tax credit is not refundable nor carry-forwardable, which implies that investors need to have sufficient tax liability in the year to utilize the credit effectively, otherwise, the benefit is lost.
Investors are enticed to engage with LSVCCs, entities formed through collaboration with trade unions, aiming to enhance employment opportunities within eligible businesses. The shares purchased must meet specific criteria, including being newly issued common voting shares that are non-redeemable and non-convertible, ensuring a stable and committed investment approach. These shares must also not participate in profit-sharing or dissolution rights beyond the terms specified, maintaining a straightforward investment framework that prevents overlap with other income tax benefits apart from RRSP deductions or federal LSVCC credits.
Committed to ensuring capital flows efficiently into the local economy, LSVCCs play the pivotal role of directly issuing shares to the public and securing venture capital. Such capital is then strategically invested into eligible businesses through equity or, where applicable, subordinate debt obligations, fostering a dynamic and supportive environment for emerging companies. Notably, these investments are subject to an eight-year holding requirement, underpinning a long-term commitment to stabilize and grow the local market. Early disposal of investments within this period consequently nullifies the earned tax credits, reinforcing the necessity for sustained financial involvement.
This tax credit mechanism benefits not only investors and businesses but also aligns closely with provincial economic strategies aimed at invigorating local industries and technology sectors. By driving capital into SMEs, the program helps stimulate growth, foster innovation, and ultimately enriches the economic fabric of Nova Scotia. Moreover, while the tax credit incentivizes investment, the disclaimer provided by the government underscores a critical aspect of the program – all investments carry an inherent risk, and the provincial government does not offer guarantees or endorsements for the issuing bodies.
In conclusion, the Labour-Sponsored Venture-Capital Tax Credit serves as a vital catalyst for economic enhancement and sustainability. It empowers local entrepreneurs by making venture capital more accessible, facilitating an investment culture rooted in community development and social responsibility. This initiative marks a significant step forward in solidifying Nova Scotia's economic resilience, demonstrating the province's commitment to nurturing its business landscape through strategic financial instruments.
