Small Business Investor Tax Credit Program

The Small Business Investor Tax Credit Program offers structured tax incentives to support investment in eligible New Brunswick small businesses and community economic development corporations. The program provides both individuals and corporate investors with specific modalities to optimize the financial benefits of their investments.

• Individual investors receive a 50% non-refundable personal income tax credit of up to $125,000 per year for investments up to $250,000.
• Corporate and trust investors are eligible for a 15% non-refundable corporate income tax credit up to $75,000 for eligible investments up to $500,000.
• Tax credits can be carried forward for seven years or back three years if not fully utilized in the investment year.
• Investments made within the first 60 days of a calendar year by individual investors can be claimed as a tax credit in the prior taxation year.
• A fee applies for the Certificate of Registration and the issuance of each investor's tax credit certificate.
• Investors must hold their shares for a minimum period of four years to remain eligible for the tax credit benefits.

Eligibility for the Small Business Investor Tax Credit program requires that applicant corporations meet specified criteria to qualify.

• The corporation must be a private company.
• The corporation must be incorporated or registered to carry on business in New Brunswick.
• The corporation must have authorized capital consisting of shares without par value.
• The corporation must have net tangible assets less than $40 million, including associated corporations.
• All, or substantially all, of the corporation’s assets and income must be used to generate active business income in New Brunswick.
• The corporation must pay at least 75% of its wages and salaries to individuals who are residents of New Brunswick in each of the four years after registration, unless it exports more than 50% of its goods and services outside of N.B., in which case the requirement is for 50%.
• The corporation must not provide loans or financial assistance to purchase shares included in a specified issue under the program.
• Issued shares must not be purchased by investors who disposed of shares of the corporation after Dec. 10, 2002, and before the proposed share issuance.
• Shares to be issued must be newly issued, fully paid shares of the corporation's capital stock registered under the Small Business Investor Tax Credit Act and not include a replacement share.

Who is eligible?

Eligible expenses

The Small Business Investor Tax Credit in New Brunswick supports diverse projects that enhance economic development and investment in local businesses. Eligible projects are centered on the strategic use of funds to bolster business activities and community growth.

• Raising capital for active business operations in New Brunswick.
• Implementing economic development strategies within defined communities.
• Issuance of shares for supporting business expansion plans.
• Promotion of equity financing opportunities for local investors.
• Establishing administrative support and governance for community economic development organizations.

Eligible geographic areas

This program's eligibility with respect to geographical areas is inherently tied to entities operating or residing within the province of New Brunswick. The focus is on fostering economic development within its communities.

• Businesses that are incorporated or registered to carry on business in New Brunswick.
• Individuals who are residents of New Brunswick.
• Community Economic Development Corporations or Associations located in New Brunswick.

The evaluation and selection of projects for the Small Business Investor Tax Credit Program focus on the adequacy of the investment or community economic development plans and the compliance of the submission with statutory requirements. However, no specific point scores are allocated in the provided information.

• Assessment of the investment plan or community economic development plan's alignment with the spirit and intent of the Small Business Investor Tax Credit Act and Regulations.
• Evaluation of how the proposed use of capital will benefit the operations within the defined community or corporation located in New Brunswick.
• Verification of eligibility criteria for the applicant corporation or community economic development corporation or association, including incorporation, registration, and operational criteria.
• Compliance with the mandated use of funds, such as restrictions on lending, purchasing shares, or investing outside New Brunswick.
• Ensuring the issuance of newly issued, fully paid shares without inclusion of replacement shares.
• Compliance with shareholding and capital requirements, such as minimum investment amounts and holding periods.

The application process involves multiple steps, fees, and compliance regulations that must be met to qualify for the Small Business Investor Tax Credit. Additionally, there are specific criteria for both corporations and community economic development corporations or associations.

• A fee of $100 applies to each application for registration under the program.
• A fee of $25 applies to each investor tax credit certificate requested.
• Funds raised cannot be used for lending, purchasing shares of any other person, or investing outside New Brunswick, among other restrictions.
• An investor must hold the shares for at least four years, or the tax credit will need to be repaid.
• The total investment by an individual investor must not be less than $1,000, and by a corporation and trust investor not less than $50,000.
• Eligible investments do not include shares issued with the main intention of claiming the tax credit.
• If an investor redeems or disposes of shares before the four-year period, they must repay the tax credit amount, including interest, unless the shareholder has passed away.
• During the four-year holding period, the applicant must file annual returns and provide detailed status reports and financial statements.
• The program does not guarantee the value of any shares issued and does not express opinions on the financial condition of the participating entities.