Direct Equity Tax Credit

Overview of the Direct Equity Tax Credit program:

The Newfoundland and Labrador Direct Equity Tax Credit (DETC) Program is designed to encourage investment in small businesses within the province by offering a tax credit to investors. This initiative aims to stimulate economic growth, support entrepreneurship, and help small businesses access the capital they need to expand and thrive.

Benefits of the Direct Equity Tax Credit program:

• The DETC Program offers significant benefits for both small businesses and investors:
• For Businesses: Small businesses in Newfoundland and Labrador can attract investment by offering potential investors a 35% tax credit on their investment. This can make the business more appealing to investors, thereby increasing the likelihood of securing the necessary capital for growth and development.
• For Investors: Investors who participate in the program receive a tax credit of 35% on the amount invested in eligible small businesses, up to a maximum credit of $150,000 per year. This reduces their provincial tax liability, making it a financially attractive way to support local businesses.

Eligibility criteria of the Direct Equity Tax Credit program:

• To be eligible for the DETC Program, businesses must meet the following criteria:
• Location: The business must be based in Newfoundland and Labrador.
• Business Type: The program is intended for small businesses engaged in activities such as manufacturing, processing, tourism, research and development, aquaculture, information technology, and other sectors that contribute to economic growth in the province.
• Size: The business must be a small enterprise, typically defined by the program's guidelines on revenue and employment levels.
• For investors to claim the tax credit, they must invest in eligible shares of a qualifying small business in Newfoundland and Labrador.