Small Business Investor Tax Credit Program
NB, Canada
Tax credit to drive New Brunswick business investment
grant_single_labels|summary
grant_single|eligibleFinancing
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- grant_single|projectCostPercent
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- grant_single|timelineUnspecified
grant_single|financingType
Tax Credits
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- grant_single|allIndustries
grant_single|grantors
- Government of New Brunswick
- Department of Finance and Treasury Board (NB)
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grant_card_status|open
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Tax credit of 50% on investments up to $250,000 for individual investors and a tax credit of 15% on investments up to $500,000 for corporations and trusts on eligible investments in your New Brunswick small business.
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All business sectors in New Brunswick are eligible to participate in the Small Business Investor Tax Credit. Applicant community economic development corporations or associations must operate an active business or evaluate and make investments in one or more active businesses based on criteria defined in their community economic development plan.
- Operating an active business
- Evaluating and making investments in active businesses
- Providing information and educating investors on the role of capital in business
- Investing capital raised in businesses within the defined community
- Exercising ownership rights for investments made
- Providing administrative support
grant_single|admissibleProjectsExample
$400,000
Moncton
Development of an online education platform by Acadienne Educators Collective
$350,000
Dieppe
Launch of a new artisan craft marketplace by Maritimes Artisans Guild
$300,000
Fredericton
Renovation of the Maple Leaf Bakery for improving production efficiency and expanding product lines
$450,000
Bathurst
Development of a mobile healthcare clinic by HealthConnect Inc
$600,000
Saint John
Expansion of GreenTech Solutions for developing sustainable energy technologies
$250,000
Miramichi
Creation of a local organic farming initiative by Sunrise Cooperative
grant_single_labels|admissibility
To be eligible for the Small Business Investor Tax Credit Program, a corporation or community economic development corporation/association must meet specific criteria related to incorporation, business operations, and use of funds. Both individual and corporate investors must also comply with specific requirements.
- The corporation must be a private company
- Incorporated or registered to carry on business in New Brunswick
- Must have authorized capital consisting of shares without par value
- Net tangible assets must be less than $40 million (including associated corporations)
- Substantially all assets and income used to generate active business income in New Brunswick
- Must pay at least 75% of wages and salaries to New Brunswick residents for four years, or 50% if exporting more than 50% of goods and services outside of N.B.
- Cannot provide financial assistance for share purchases
- Issued shares must be newly issued, fully paid shares, not replacement shares
- Investment capital must not be used for lending, purchasing shares of other persons, investment outside New Brunswick, investment in land (except secondary to active business), purchasing overpriced services or assets, or similar activities prohibited under the program
- Investor must be a New Brunswick resident, 19 years or older, or a corporation/trust with a permanent establishment in New Brunswick
- Minimum investment by individual investor is $1,000; for corporation and trust investor, it's $50,000
- A minimum holding period of four years is required for investors
grant_eligibility_criteria|who_can_apply
Yes, there are eligible types of companies for the Small Business Investor Tax Credit Program. The eligible businesses include all sectors in New Brunswick, provided they meet certain criteria.
- Private companies incorporated or registered in New Brunswick.
- Private companies with authorized capital consisting of shares without par value.
- Companies with net tangible assets of less than $40 million, including associated corporations.
- Companies using substantially all of their assets and income to generate active business income in New Brunswick.
- Companies paying at least 75% of wages and salaries to New Brunswick residents, or 50% if exporting more than 50% of their goods/services outside New Brunswick.
- Approved Community Economic Development Corporations (CEDC) or associations.
grant_eligibility_criteria|zone
The eligible geographic zone for this grant is the province of New Brunswick.
- New Brunswick
grant_single_labels|criteria
The New Brunswick Small Business Investor Tax Credit program has specific evaluation and selection criteria that must be met by applicant corporations and community economic development corporations or associations.
- 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 New Brunswick residents, unless it exports more than 50% of its goods and services outside of New Brunswick, in which case it must pay at least 50% of its wages and salaries to New Brunswick residents.
- The corporation must not lend money, provide loan guarantees, or any other financial assistance for the purchase of shares.
- Eligible shares must be newly issued, fully paid shares and not replacement shares.
- The community economic development corporation or association must be incorporated or registered to carry on business in New Brunswick.
- The community economic development corporation or association must have a constitution restricting its business to specific activities such as operating an active business or making investments based on defined criteria.
- It must have a constitution describing the defined community and providing for annual general meetings of shareholders.
- The community economic development corporation or association must have a Board of Directors with at least six individuals from the defined community.
- The community economic development corporation or association must not be a non-profit, charitable, or non-taxable entity.
- It must have authorized capital consisting of at least one class of voting equity shares without par values for a corporation; and for an association, at least one class of voting equity shares with par value where purchase price is not less than par value and redemption price does not exceed par or book value, whichever is less.
- The community economic development corporation or association must have net tangible assets less than $40 million (including associated corporations and associations).
- All or substantially all of its assets and income must be used to generate active business income in New Brunswick.
- It must pay at least 75% of its wages and salaries to individuals who are residents of New Brunswick unless it exports more than 50% of its goods and services, in which case 50% of wages and salaries must be paid to New Brunswick residents.
- It must not lend money or provide any other financial assistance for the purchase of shares.
- Shares must be newly issued, fully paid shares and not replacement shares.
grant_single_labels|register
- Step 1: Application for a Certificate of Registration
- Applicant corporations file an application with the New Brunswick Department of Finance.
- Applicant community economic development corporations and associations approved by FCNB file an application with the New Brunswick Department of Finance.
- Submit an investment plan for corporations or a community economic development plan for associations.
- A fee of $100 applies to each application for registration under the program.
- Step 2: Issuance of Certificate of Registration
- The Department of Finance reviews the application to ensure conditions are met.
- If approved, the Department issues a Certificate of Registration allowing the business to issue eligible shares up to a specified value on or before a specified date.
- For community economic development corporations/associations, the maximum capital that can be raised is $3,000,000 within a 12-month period.
- Step 3: Finalization of Equity Sale
- Approved businesses have 90 days from their approval date to finalize the sale of shares to the investors included in the investment or community economic development plan.
- Step 4: Application for a Tax Credit Certificate
- Within 30 days of selling eligible shares, the business provides proof of sale along with required investor information to the New Brunswick Department of Finance.
- A fee of $25 applies to each investor tax credit certificate requested.
- The Minister of Finance issues a Tax Credit Certificate to eligible investors on approved purchases of shares.
- Step 5: Attachment of Tax Credit Certificate to Income Tax Returns
- Individual investors attach the tax credit certificate to their personal income tax returns.
- Corporate and trust investors attach the tax credit certificate to their corporate income tax returns to obtain a reduction in provincial income tax payable.
- Step 6: Annual Reporting
- During the four-year holding period, the applicant corporation, community economic development corporation, or association must file an annual return and detailed status report.
- Submit financial statements that have been independently reviewed or audited by a chartered professional accountant.
- Step 7: Compliance and Enforcement
- Ensure compliance with the Small Business Investor Tax Credit Program by adhering to holding requirements and other conditions.
- Failing to comply can result in the repayment of the tax credit received, including interest.
grant_single_labels|otherInfo
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.
Apply to this program
Summary of the Small Business Investor Tax Credit (SBITC) Program
The New Brunswick Small Business Investor Tax Credit (SBITC) provides a 50% non-refundable personal income tax credit for eligible individual investors and a 15% non-refundable corporate income tax credit for eligible corporations and trusts. The program aims to enhance access to equity financing for New Brunswick small businesses and community economic development corporations (CEDC) or associations.
Comprehensive Guide to Understanding the Small Business Investor Tax Credit (SBITC) Program
The Small Business Investor Tax Credit (SBITC) Program in New Brunswick is a significant initiative designed to bolster the province’s economic health. By incentivizing individual and corporate investments in small businesses and community economic development corporations or associations, the program enriches the local economy, fuels entrepreneurial growth, and creates job opportunities. Here, we provide an in-depth look at the program, its eligibility criteria, and process.
Program Description and Objectives
Description
The New Brunswick Small Business Investor Tax Credit offers a 50% (for investments made post-April 1, 2015) non-refundable personal income tax credit up to $125,000 per year for individual investors. Similarly, for corporate and trust investors, a 15% non-refundable corporate income tax credit on eligible investments up to $500,000 is available, translating into a maximum tax credit of $75,000.
Objective
The primary objectives of the SBITC program are to:
- Provide an essential source of capital by improving access to equity financing for small businesses, CEDCs, and associations within New Brunswick.
- Encourage investment by New Brunswick residents in local small businesses and community economic development initiatives.
Program Process
The SBITC program is structured as a two-stage process:
- Application for a Certificate of Registration.
- Application for a Tax Credit Certificate.
Phase 1: Certificate of Registration
To take advantage of the SBITC program, eligible applicant corporations, CEDCs, and associations must apply for registration. A fee of $100 applies to each application. The application process involves submitting an investment plan or a community economic development plan that outlines the proposed use of the raised capital.
Corporate Application Requirements
Applicant corporations must meet the following requirements:
- Submit an investment plan describing the proposed use of the capital.
- Fulfill the eligibility criteria, which includes being a private company incorporated or registered to operate in New Brunswick, with net tangible assets less than $40 million.
- Ensure at least 75% of wages and salaries are paid to New Brunswick residents over four years, or 50% if exporting more than 50% of goods and services outside of New Brunswick.
- The shares to be issued must be newly issued, fully paid shares.
Community Economic Development Corporation or Association Requirements
Applicant CEDCs or associations must:
- Submit a community economic development plan outlining the proposed use of the capital.
- Meet eligibility criteria, including incorporation/registration in New Brunswick and having a Board of Directors with at least six individuals residing in the defined community.
- Ensure the shares issued are newly issued, fully paid shares of the registered capital stock of the CEDC or association.
Issuance of the Certificate of Registration
Once the application is approved, the Department of Finance will issue a Certificate of Registration, allowing the approved entity to issue eligible shares within a specified value and period. The approved entities have 90 days from their approval date to finalize the sale of shares to investors.
Phase 2: Tax Credit Certificate
Upon successful sale of the shares, the business must provide proof of sale and necessary investor information to the New Brunswick Department of Finance within 30 days. A fee of $25 applies to each investor tax credit certificate requested. Subsequently, the Minister of Finance issues Tax Credit Certificates to eligible investors.
Tax Credit Details
- Individual investors can claim a 50% tax credit on investments up to $250,000, with a maximum annual tax credit of $125,000.
- Corporate and trust investors are eligible for a 15% tax credit on investments up to $500,000, with a maximum annual tax credit of $75,000.
- The tax credit, though non-refundable, can be carried forward for seven years or back for three years if not fully utilized in the year of the investment.
Eligibility Requirements
Eligible Business Sectors
All business sectors in New Brunswick are eligible to participate in the SBITC program.
Applicant Corporation Eligibility Criteria
To register in the SBITC program, the applicant corporation must:
- Be a private company incorporated or registered in New Brunswick.
- Have authorized capital consisting of shares without par value.
- Have net tangible assets of less than $40 million.
- Use all or substantially all assets and income to generate active business income in New Brunswick.
- Not provide financial assistance for the purchase of shares included in the specified issue under the SBITC program.
Investor Eligibility
Individual investors must be:
- 19 years of age or older.
- Residents of New Brunswick.
- Investment minimums: $1,000 for individual investors, $50,000 for corporations and trust investors.
- Shares must be held for at least four years to maintain eligibility for the tax credit.
Investment Eligibility
- Minimum capital to be raised: $10,000 (individual investors) and $50,000 (corporate and trust investors).
- Shares must be newly issued and fully paid.
- Investments are capped at $250,000 annually for individual investors and $500,000 annually for corporate and trust investors.
Prohibited Uses of Capital
The capital raised cannot be used for:
- Lending money or purchasing shares from another entity.
- Investments outside New Brunswick.
- Investing in land not directly related to the business's operations.
- Paying dividends or funding the purchase of previously issued shares.
Share Certificates and Holding Requirements
Shares must be fully paid before issuance and endorsed with a specific statement as per the Small Business Investor Tax Credit Act. The investor has to hold these shares for at least four years, failing which the tax credit will need to be repaid with interest, except in cases of the investor’s death.
Enforcement and Compliance
Strict compliance measures ensure the integrity of the SBITC program:
- Annual reporting and detailed status reports on shareholdings and financial statements.
- Monetary penalties and repayments are mandatory for violations of the program’s requirements or for misusing the funds raised through share issuance.
- Special provisions are made in case the issuing entity goes into receivership or bankruptcy.
Further Assistance and Contact Information
For additional details or assistance, interested parties can contact:
Telephone: (800) 669-7070
Fax: (506) 444-5086
Internet: http://www.gnb.ca/Finance
Email: sbitc@gnb.ca
Mailing Address:
Small Business Investor Tax Credit Program
Finance and Treasury Board
Marysville Place, P.O. 3000
Fredericton, NB
E3B 5G5
Disclaimer: The information provided outlines the application process under the Province of New Brunswick Small Business Investor Tax Credit Act, and should not be considered a legal substitute for the laws, regulations, or administrative documents it references.