Venture Capital Program
The Small Business Venture Capital Program offers tax credits to investors to encourage them to make equity capital investments in B.C.-based small businesses.
The government recognizes that creating new small businesses and expanding existing ones will contribute to a healthy economy. These programs give small business continuous access to early stage venture capital to help them develop and expand.
B.C. investors receive a 30% tax credit on their investment in a venture capital corporation (VCC) or an eligible business corporation (EBC).
2020 Tax Budget Year
The 2020 tax budget year started on January 1, 2020 and ends December 31, 2020.
VCCs and EBCs planning to raise tax credit supported investment require a 2020 equity authorization.
Tax credit budgets are limited. VCCs and EBCs are encouraged to claim tax credits as soon as possible after raising investment.
2019 Tax Budget Year
The 2019 tax budget year ended on December 31, 2019.
All EBCs and VCCs that raised equity during the 2019 tax budget year should now have claimed tax credits for their investors through the electronic Tax Credit Application (eTCA).
2019 and 2020 Tax Credit Certificates
To ensure that all investors who invested in a registered business receive a tax credit, we have changed the way we manage our tax credit budgets. As a result, those investors who invested during calendar 2019 will receive a tax credit certificate with a Taxation Year of 2019 listed on the certificate. This refers to the tax budget year a tax credit was claimed in.
Individual investors who invested in the first 60 days of the calendar year – from January 1 to February 29, 2020 will receive a tax credit certificate with a Taxation Year of 2020.
The Canada Revenue Agency (CRA) uses the Investment Date on the certificate to determine if the tax credit can be applied to the previous year’s tax return.
Therefore, an individual investor who receives a tax credit certificate with the Taxation Year of 2020, and where the certificate’s Investment Date is between January 1 to February 29, 2020, can elect to claim the tax credit when filing their 2019 tax return.
Budget 2019 changes to the Venture Capital Programs
As part of Budget 2019, “convertible right” (i.e. Simple Agreement for Future Equity, or “SAFE”) was added to the definition of “equity share” under the Small Business Venture Capital Act.
The Tax Credit Application Certification are the terms and conditions the EBC/VCC certifies when entering an investment through the electronic Tax Credit Application system (eTCA).
The following policy statement defines the "service costs" that are acceptable "activity costs" when a small business is involved in the export of goods or technology.