Small business venture capital tax credit

A buyer raising equity from B.C. investors may hear this credit mentioned as an incentive for them. This entry covers British Columbia only; check the rules where you are. The B.C. government says the credit encourages equity capital investments in B.C. small businesses to give them access to early-stage venture capital.

How it works in B.C.

The Small Business Venture Capital Act defines an eligible business corporation as a small business registered under Part 2 of the Act. The B.C. government says the credit for individuals is fully refundable but must first be applied against total income tax payable, and that the credit is not refundable for corporations. A credit is tied to a tax credit certificate issued by the administrator. The Act also contains repayment provisions, including on early redemption of shares.

What to ask

• Is the company, or the share offering, registered under the Act?
• Has the administrator issued a tax credit certificate for the shares?
• What happens to the credit if the shares are redeemed or cancelled early?

See how to get a loan to buy a business and the entry on investor debt versus investor equity.