Labour-sponsored venture capital corporation (LSVCC)

A founder offered money by a labour-sponsored fund may hear about its tax credit. The Income Tax Act defines an approved share as a share of the capital stock of a prescribed labour-sponsored venture capital corporation, with listed exclusions. This entry covers the federal credit only; check the provincial rules where the fund is registered.

What the Canada Revenue Agency says

• An individual who purchased approved shares of a prescribed LSVCC may be able to claim the labour-sponsored funds tax credit, if all the conditions the CRA lists apply.
• The credit for a solely federally registered LSVCC was eliminated for the 2017 and subsequent tax years.
• For shares of a provincially or territorially registered LSVCC that is not federally registered, bought after 2003, the federal credit can be claimed only if a provincial or territorial credit is also available for those shares.

What to ask

The CRA describes the credit as one the individual investor claims. A company approached by a fund should ask for the fund’s own terms and take advice on them. For how outside money fits with other funding, see assembling the capital stack. A provincial investor credit is described in small business venture capital tax credit.