Tax credits are issued to investors only if the VCC raised the equity capital under a pre-approved authorization from the Investment Capital Branch and is in compliance with the Small Business Venture Capital Act (the “Act”).

Applying for Tax Credits 

The Share Purchase Reports are used, together with a Tax Credit Application, to issue tax credit certificates to shareholders.  The VCC is responsible for filing the Tax Credit Certificate (together with all attachments) with the Administrator of the Act.  VCCs are urged to file their Tax Credit Applications by the end of the program year in which shares were issued to allow sufficient processing time to issue tax credit certificates before Canada Revenue Agency's filing deadline.

Please ensure that all VCC investors complete and sign a Share Purchase Report at the time they purchase the shares, and submit the Share Purchase Reports to our office.  Remember to keep a record of the Share Purchase Reports submitted.

Tax credit certificates are usually issued in the first four months of the year following the investment.  If any shareholders experience delays in receiving their tax credit certificates, they should first contact their VCC representative to ensure that the company has filed a Tax Credit Application with the Ministry of Economic Development.

  Share Purchase Report ( 42.4KB) ( 83.5KB)

  Tax Credit Application ( 44.3KB) ( 109KB)

A shareholder attaches the tax credit certificate to his/her income tax return filed with Canada Revenue Agency for the taxation year stated on the certificate.  A maximum annual tax credit claim differs for corporate shareholders and individual shareholders.  However, both may carry forward an unclaimed tax credit amount for four subsequent taxation years.

An individual, referred to in section 2 (1) of the Income Tax Act (British Columbia), who is resident in British Columbia may claim up to $60,000 in tax credits in one year.  An individual investor also has the option of claiming a tax credit for the prior taxation year if the shares were purchased in the first 60 days of the year.  The amount claimed is applied toward payment of all income tax amounts due to Canada Revenue Agency with any excess refunded directly to the individual.

A corporation, referred to in section 2 (2) of the Income Tax Act (British Columbia), that has a permanent establishment in British Columbia may claim the tax credit to offset British Columbia income tax otherwise payable in a year.  The tax credit issued to a corporate investor is not refundable.

If an individual shareholder resides in British Columbia at the date of the subscription for shares and yet resides outside the province at year-end, this may affect the individual's ability to claim the tax credit certificate.  Individual shareholders who have moved outside British Columbia or who are planning to move before year-end are urged to consult with their financial advisors about their eligibility to claim the tax credit certificate. 

Tax Credit Liability

If the VCC or its investors engage in an ineligible transaction or is in non-compliance with the Small Business Venture Capital Act (the “Act”), the investor may be required to repay the tax credits.  Under section 20 (1) of the Act, the VCC and its investors must comply with the following:

• no tax credit has been previously allowed or paid for the shares;

• the shares, for which the VCC applies for tax credits, are not a type of security that entitles its holders to claim a tax credit against tax payable under the Income Tax Act (Canada) for the purchase of the security; and

• the eligible investor shareholders acquire the shares directly from the VCC.

A tax credit certificate issued under the Venture Capital Programs may be revoked by the Administrator of the Act if the Administrator determines that, at the time the tax credit certificate was issued or at a subsequent time, the VCC was in contravention of the Act or the Regulations.  A tax credit certificate that is revoked by the administrator is deemed never to have been issued.

Since the consequences of non-compliance can be serious, program users are urged to consult with your legal and financial advisors.

  Audit

Useful Links

  Canada Revenue Agency

Administers tax laws for the Government of Canada and for most provinces and territories.

  Ministry of Small Business and Revenue  

Supports the prosperity of British Columbians through small business growth, effective tax administration and
revenue management, and a responsible regulatory system.