Innovation Equity Tax Credit
$500,000.00
Tax credit
Description:
The Innovation Equity Tax Credit (Innovation ETC) is a non-refundable personal and corporate income tax credit available to eligible investors who invest in approved corporations.
The credit is meant to encourage investors to make equity capital investments in eligible Nova Scotia small and medium corporations engaged in innovative activities contributing to inclusive economic growth and increase investment in innovation that would not happen anyway. The investments incented by this program are meant to provide the capital required for research, development or commercialization of new technology, new products or new processes.
Comments on Funding:
The credit for an eligible investor who is an individual is equal to 35% of an eligible investment made in an approved corporation. The credit for an eligible investor who is an individual increases to 45% for an eligible investment made in an approved corporation in an eligible classification within the oceans technology and life sciences sectors. The maximum annual investment amount for an individual is $250,000.
The credit for an eligible investor that is a corporation is equal to 15% of an eligible investment made in an approved corporation. The maximum annual investment amount for a corporation is $500,000.
Rolling deadline
Eligibility:
The applicant must:
1. Be an eligible corporation: A corporation is an eligible corporation provided that it
a) is a Canadian Controlled Private Corporation;
b) is a taxable Canadian corporation;
c) carries on a business in Nova Scotia (and is registered in Nova Scotia);
d) was incorporated less than 10 years ago;
i. if the corporation was formed as the result of an amalgamation, its predecessor
corporations were incorporated within the 10-year period before the date of its
application for approval;
e) has its head office in Nova Scotia (see page 5);
f) uses all or substantially all of its assets in an active business (see page 5);
g) has less than $15 million in assets (including assets of associated corporations);
h) has fewer than 100 employees (including employees of associated corporations);
i) pays at least 50% of its remuneration to employees or full-time contractors (see page who are residents of Nova Scotia and report to or deal with a permanent establishment of the corporation in Nova Scotia;
j) has authorized capital consisting of at least 1 class of common voting shares;
k) is developing or implementing new technologies or applying existing technologies in a new
way to create new products, services or processes; and
l) does not fall under any of the restrictions below
2. Or be an eligible investor:
a) an individual who is a resident of Nova Scotia and at least 19 years of age, or
b) a taxable Canadian corporation which
c) is registered to carry on business in Nova Scotia,
d) has its head office in Nova Scotia, and
e) is not a qualifying venture capital fund under section 37B of the Income Tax Act (Nova Scotia).
Application Steps:
The applicant must:
1. apply for a Certificate of Registration before accepting investments from eligible investors by submitting the completed application packages via email to the Innovation ETC Administrator.
2. Issue eligible investments to eligible investors through a specified issue.
3. apply for Tax Credit Certificates on behalf of all eligible investors who made eligible investments during the time the corporation was registered under the program. The application for Tax Credit Certificates must be received by the department within 6 months of the expiry date on the corporation’s Certificate of Registration.
4. submit an annual return to the Innovation ETC administrator for each of the 4 years after the expiry date on the certificate of registration.
Documentation Needed:
To apply for the Certificate of Registration the applicant must submit:
1. the completed and signed application form,
2. the financial statements for the previous tax year, together with a review engagement report or auditor’s report, for the applicant corporation and for all corporations associated with the applicant corporation,
3. T2 Corporate Income Tax Return for the previous tax year of the applicant corporation and of all corporations associated with the applicant corporation (including all forms and schedules),
4. an up-to-date and notarized shareholder’s register,
5. the corporate chart/structure, if applicable,
6. the shareholder agreements, if any,
7. the debenture agreements, if any,
8. the proposed investor forms completed by all proposed eligible investors,
9. a brief business plan,
10. the Certificate of incorporation, constitution articles of incorporation and memorandum of association.
To apply for the Tax Credit Certificates the applicant must submit:
1. the completed Application Form,
2. the up-to-date and notarized shareholder’s register,
3. an Investor Data Report in Excel,
4. copy of each share certificate or convertible debenture issued to each eligible investor showing the terms of the share/debenture,
5. a signed statement from an authorized officer of the corporation.
6. signed statements from each eligible investor,
7. proof of payment from each eligible investor displaying the amount invested and date of investment.
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Maurice