Small Business Investor Tax Credit Program

By mmuise
Description:

The New Brunswick Small Business Investor Tax Credit provides a 50% (for investments made after April 1, 2015) non-refundable personal income tax credit of up to $125,000 per year (for investments of up to $250,000 per individual investor) to eligible individual investors who invest in eligible small businesses and/or community economic development corporations (CEDC) or associations (co-op) in the province.
It also enables New Brunswick corporations and trusts to be eligible for a 15% non-refundable corporate income tax credit on eligible investments in small businesses in the province up to $500,000.


Comments on Funding:

Funding is a 50% non-refundable personal income tax credit of up to $125,000 per year per individual investor.
The tax credit for a corporation and trust investor is 15% of the investment up to the maximum annual tax credit per corporation and/or trust investor of $75,000.

Deadline: Rolling deadline
Eligibility:

The applicant can be a corporation, or an individual investor.

The applicant must be a corporation that:

  • is a private company,
  • is incorporated or registered to carry on business in New Brunswick,
  • has authorized capital consisting of shares without par value,
  • has net tangible assets less than $40 million (including associated corporations),
  • uses all, or substantially all, of its assets and income to generate active business income in New Brunswick,
  • pays, in each of the four years after the date of registration, at least 75% of its wages and salaries to individuals who are residents of New Brunswick unless the corporation exports outside of N.B. more than 50% of their goods and services, then, the requirement is for 50% of its wages and salaries to individuals who are resident of New Brunswick,
  • is not lending money, providing a loan guarantee or any other financial assistance, to a person for the purchase of shares included in a specified issue under the Small Business Investor Tax Credit Program,
  • will issue new shares, fully paid shares of the capital stock of a corporation that is registered under the Small Business Investor Tax Credit Act and will not include a replacement share. The issued shares will not be purchased by investors who have disposed of shares of the corporation after Dec. 10, 2002, and before the proposed share issuance.

    The applicant must be an individual investor that:
  • is 19 years of age or older,
  • is a New Brunswick resident.
    The total investment by an individual investor shall be not less than $1,000, and by a corporation and trust investor not less than $50,000.
Application Steps:

The applicant must complete a two-stage process:

1. application for a Certificate of Registration. A fee of $100 applies to each application for registration under the program. The Department of Finance will issue a Certificate of Registration.

2. application for a Tax Credit Certificate. A fee of $25 applies to each investor tax credit certificate requested. The Department of Finance will issue a Tax Credit Certificate to eligible investors on approved purchases of shares.

Documentation Needed:

Coorporation applicants must submit:
1. an investment plan,
2. the income tax return from the previous taxation year (including those of associated corporations),
3. a copy of the most recent financial statements of the corporation (including those of associated corporations) which have been reviewed by a person who is a licensed or registered member of an accounting association regulated by the Province or proforma financial statements for any start up corporation,
4. a copy of the corporate share registry and share transfer registry certified by an officer of the company,
5. a copy of the instrument of incorporation certified by an officer of the company,
6. a statement signed by each investor certifying that he or she understands the holding requirements for the shares and has read the investment plan,
7. a separate declaration stipulating that the eligible investor is in compliance with Small Business Investor Tax Credit Act Section 14.1(2) for each corporation and trust investor,
8. a certificate signed by the directors of the corporation to certify that the information contained in the application is complete and accurate.

Other Things to Note:

Tax credit for business shareholders/investors.

About the author
mmuise