We want Startups in Atlantic Canada to get on a level playing field with the rest of the global technology economy.
Laurel Broten recently released a review of the existing taxation system (PDF) in Nova Scotia. Much like the Savoie Report of (2) years prior, as well as the Durufle Report on the Nova Scotia Government’s role in Venture Capital from 2014, it recommended that Nova Scotia should increase the Equity Investment Tax Credit and that it should make it available to more types of investors.
The Ivany Report has given us a powerful and daunting call to action: Nova Scotia must double the # of Startups we are producing in the next (5) years. To deliver on that there is one key ingredient we need, and it’s in short supply: Risk capital. That is why the Ivany Report also recommended Savoie’s proposed enhancements to the Equity Tax Credit.
Why is this important?
The Regional Equity Tax Credit would give startups in Nova Scotia and Atlantic Canada a fighting chance in attracting investment in their new startups. That in turn gives our fledgling companies the opportunities they need to start and to grow right here.
How does it work today?
Eligible investors in Nova Scotia, who are Nova Scotia taxpayers, can claim a credit 35% of their investments in eligible NS companies up to a total of $17,500 per year total.
- The investment must only be in non-redeemable, non-convertible, fully paid, voting common shares (not typical in tech startups)
- The shares must be held for 5 years
What do we want changed?
The Equity Tax Credit should, at a minimum, grow to a maximum $250,000 (as recommended by Savoie, Durufle and Broten)
The Credit should be made available for investments made anywhere in Atlantic Canada
Corporations and Trusts should be made eligible
Convertible Debentures and Preferred Shares should be eligible to participate
Reduce the 5 year holding requirement to 2 years
Clarify the definition of the Equity Tax Credit to focus on early stage technology and other high growth startups, specifically excluding things like Real Estate or other non-targeted industries as per the Savoie Report recommendation
What can you do right now to help? (The deadline to provide comments is February 28th!)