The Innovation Equity Tax Credit

We are looking to help advise the province on the Nova Scotia New Innovation Equity Tax Credit.

Funding is crucial to technology companies and the paper Modernizing EQUITY TAX CREDITS in Atlantic Canada and Stimulating Innovative Companies is a one area where we can increase the discussion on how this can be enhanced. The paper was developed by James Curry, CA CPA , with contributions and edits from Sean Sears, CEO , Ogden Pond, Scott Moffitt, Managing Director BioNova and Keith MacIntyre, Tax Partner, Grant Thornton.

What is the Innovation Equity Tax Credit? Beginning January 1, 2019, a new Innovation Equity Tax Credit will be introduced. Under the current equity tax credit program, those who are considered to be eligible investors may qualify for a personal tax credit equal to 35% of their investment, to a maximum credit amount of $17,500. Budget 2018 does not contain any details relating to the new Innovation Equity Tax Credit, but notes that the new credit will be structured with a more narrow focus and contain a threshold that is consistent with similar programs in other provinces. The existing Equity Tax Credit will be phased out over time.

The Equity tax credit (ETC) program in Atlantic Canada is an area of emerging focus in policy discussions related to financing innovation (Savoie, 2010; Ivany, 2014; Broten, 2014; Durufle, 2014; Decourcey, 2017). This advocacy is gaining traction, for example, in Nova Scotia, the Premier, the Honourable Stephen McNeil, recently mandated the Minister of Finance to make amendments to the Nova Scotia program and the Minister of Business to support the creation of enabling tax policy to promote innovation driven startups and providing supports for innovative businesses with the potential to create jobs and enhance export growth. There is also growing discussion around a regional approach (Savoie, 2010; Ivany, 2014; Broten, 2014; Durufle, 2014) to increase the uptake of the program and, in turn, increase the amount of investment in innovative small companies in Atlantic Canada.

Grant Thornton has taken the lead in advocating for this initiative. Please find the letter identifying supporters of the paper. Questions? Contact us!