Innovation Equity Tax Credit

Who can apply

Eligible Corporations A corporation is an eligible corporation provided that it

1. is a Canadian Controlled Private Corporation;
2. is a taxable Canadian corporation;
3. carries on a business in Nova Scotia (and is registered in Nova Scotia);
4. was incorporated less than 10 years ago;
5. 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;

1. has its head office in Nova Scotia (see page 5);
2. uses all or substantially all of its assets in an active business (see page 5);
3. has less than $15 million in assets (including assets of associated corporations);
4. has fewer than 100 employees (including employees of associated corporations);
5. pays at least 50% of its remuneration to employees or full-time contractors (see page 5) who

are residents of Nova Scotia and report to or deal with a permanent establishment of the corporation in Nova Scotia;

1. has authorized capital consisting of at least 1 class of common voting shares;
2. is developing or implementing new technologies or applying existing technologies in a new

way to create new products, services or processes; and

1. does not fall under any of the restrictions below.

Eligible Investors For an investment in an approved corporation to be eligible for the IETC, it must be made by an eligible investor.

An eligible investor is

1. an individual who is a resident of Nova Scotia and at least 19 years of age, or
2. a taxable Canadian corporation which
3. is registered to carry on business in Nova Scotia,
4. has its head office in Nova Scotia, and
5. is not a qualifying venture capital fund under section 37B of the Income Tax Act (Nova

Scotia).

An eligible investment is comprised of an investment made in an approved corporation by an eligible investor in exchange for newly issued

1. common voting shares,
2. preferred shares that are not redeemable during the 4 year holding period,
3. convertible debentures (may be converted to shares that fall within (a) or (b) above during the

4 year holding period).

Simple Agreements for Future Equity (SAFEs) are not considered eligible investments.

Each eligible investment must be fully paid in cash by the eligible investor and be a minimum of

1. $1,000 for individual investors, and
2. $50,000 for corporate investors.

In order for an eligible investment to be considered as part of a specified issue, it must be made before the expiry date on the approved corporation’s certificate of registration. A specified issue must

1. comply with the Securities Act (Nova Scotia),
2. have at least 3 eligible investors, at least 1 of which is investing in common or preferred

shares,

1. have a total of at least $10,000 in eligible investments,
2. comply with the spirit and intent of the Act and Regulations, and
3. not be above $5 million when cause the total amount of funds raised, by an approved

corporation (and associated corporations), across all specified issues, to be above $5 million.

All eligible investments must be held by the eligible investor in the approved corporation for a minimum of 4 years from the date the share certificate or convertible debenture is issued.