New Government Tax Credit for Alberta Investors to Increase Investment and Jobs
The Alberta Government has introduced the Alberta Investor Tax Credit (AITC) to stimulate investment in certain industries with strong job-creation potential. The AITC offers a 30% tax credit to investors who provide venture capital to eligible companies during the two-year period in which the AITC program is in force.
It is offered on a first come, first served basis. The program will start accepting applications on January 16, 2017. To receive the tax credit, corporations and individuals who are liable to pay income tax in Alberta may invest directly in an eligible business corporation (EBC) or in a venture capital corporation (VCC) that subsequently makes eligible investments in an EBC.
The EBC or VCC will first need to register through an online portal. Once the registration is approved, the registered EBC or VCC applies for approval to raise equity capital. After the equity is raised, the EBC or VCC applies for the tax credit certificate, and once this application is approved, the tax credit certificate is provided to the EBC or VCC for distribution. EBCs and VCCs cannot guarantee their investors will receive a tax credit certificate, as those certificates are issued on a first come, first served basis.
Investments made as of April 14, 2016, may be retroactively eligible for the AITC. However, the business that received the investment must register in this program in 2017.
To be eligible for the AITC, a VCC must apply to the Minister by completing a registration form. All necessary application forms are available at the Alberta investor tax credit website: https://www.alberta.ca/alberta-investor-tax-credit.aspx#toc-3
For a list of eligible and restricted investments as well as requirements, view EY’s tax alert from January 12th 2017.