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).
2019 Tax Budget Year
The 2019 tax budget year started on January 1, 2019 and ends December 31, 2019.
VCCs and EBCs planning to raise tax credit supported investment require a 2019 equity authorization.
Tax credit budgets are limited and tax credits are available on a first come first serve basis. VCCs and EBCs are encouraged to claim tax credits as soon as possible.
2018 Tax Budget Year
The 2018 tax budget year ended on December 31, 2018.
All EBCs and VCCs that raised equity during the 2018 tax budget year should now have claimed tax credits for their investors through the electronic Tax Credit Application (eTCA).
Small amounts of tax credit funds are still available. Registrants wanting to claim 2018 tax credits should contact their Portfolio Manager to determine if any tax credits are remaining.
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, some investors 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 against and is not the year that the tax credit amount must be claimed in when filing a tax return.
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.
Individual investors who invested in the first 60 days of the calendar year – from January 1 to March 1, 2019 – can elect to claim the tax credit amount in their 2018 tax return.
Therefore, an individual investor who receives a tax credit certificate with the Taxation Year of 2019, and where the certificate’s Investment Date is between January 1 to March 1, 2019, can elect to claim the tax credit when filing their 2018 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.