Equity Tax Credit

Overview of the Equity Tax Credit program:

The Equity Tax Credit (ETC) was designed to assist Nova Scotia small businesses, co-operatives and community economic development initiatives in obtaining equity financing by offering a personal income tax credit to individuals investing in eligible businesses.

Benefits of the Equity Tax Credit program:

• Maximum annual tax credit amounts vary depending on the size of the investment and when it was made. Before January 1, 2010, it is 30% of the investment made up to $50,000 yearly (maximum annual credit of $15,000). After December 31, 2009, it is calculated at 35% of the investment to a maximum of $50,000 (yearly credit of up to $17,500). Credit is not refundable but may be carried forward for 7 years or carried back 3 years.

Eligibility criteria of the Equity Tax Credit program:

• Eligible businesses include corporations and co-operatives but not sole proprietorships and partnerships. Most
• Small and medium-sized Nova Scotia businesses are eligible provided that the organization:
• Is taxable,
• Is headquartered in Nova Scotia,
• Carries on a business in Canada,
• Has less than $25 million in assets (including affiliated organizations),
• Has less than $25 million in revenues (including affiliated organizations),
• Has fewer than 500 employees (including employees of affiliated organizations),
• Pays at least 25% of salaries and wages in Nova Scotia,
• Is an active business (see below) or will be investing all or substantially all of the funds raised in a business
• That would otherwise qualify under the ETC program,
• Has at least 3 eligible investors taking part in the specified issue (for corporations),
• Has authorized capital consisting of at least 1 class of common voting shares (for corporations),
• Is a marketing, producer or employee co-operative (for co-operatives),
• Is not incorporated for the professional practice of an accountant, dentist, lawyer, medical doctor,
• Veterinarian, or chiropractor, and
• None of the officers and directors of the eligible business are officers or directors of any other corporation
• Or co-operative that is currently not in compliance with the Act or Regulations.