Small Business Venture Capital Tax Credit Program (SBVCTC)

The SBVCTC will assist eligible small corporations to issue new equity to primarily new investors. The small corporation will be able to issue from $100,000 up to a limit of $5,000,000 of new equity that will be eligible investments for the SBVCTC. The SBVCTC is not a tax benefit for the eligible corporation.

Eligible investors who purchase eligible investments are able to earn a 30% non-refundable provincial tax credit up to an annual limit of $135,000 in provincial tax credits. From the $135,000 of earned provincial tax credits the investor can claim on its income tax return an annual limit of $45,000 in provincial tax credits and carry forward unused provincial tax credits for ten years.

Eligibility Criteria 

The criteria to be considered an eligilble small business corporation is as follows:

• the business must be a Canadian-controlled private corporation; 
  
• all or substantially all of the carrying value of the assets must be used principally in an active business; 
  
• the revenue of the business must principally be derived from one or more active businesses that are not ineligible activities; 
  
• have either,
  
  
  • 50 or less full time equivalent employees, or
  • less than $15,000,000 in gross revenue;
    
    
• the small corporation has at least $25,000 in stated capital;
  
• 25% of the employees are resident in Manitoba ; and
  
• The corporation cannot be a reporting issuer as defined in The Securities Act.
  
• The total amount of equity raised under the SBVCTC program by the corporation and its affiliates are not more than $5,000,000
  

In brief, ineligble activities include:

• providing professional services; 
  
• providing management, administrative, financial or other similar services; 
  
• leasing, developing or selling real property; 
  
• exploring for, developing or processing mineral, oil and gas resources; 
  
• farming, fishing, hunting or similar activity; 
  
• holding, operating or granting franchises; 
  
• operating a restaurant, lounge, bar or similar establishment; and 
  
• performing arts, amusement or gaming activities; and
  
• providing educational, health care, social or other similar services
  
  

If approved to issue shares that are eligible for the SBVCTC the corporation can not use the share proceeds for the following purposes:

• investment outside of Manitoba; 
  
• to lend money; 
  
• to pay for a business reorganization or merger; 
  
• to acquire an interest in land, 
  
• to pay a dividend; 
  
• to pay an amount owing to a shareholder, or an affiliate or related person of a shareholder; 
  
• to purchase goods and services from a shareholder or affiliate of the issuer or from a shareholder or member of an affiliate of the issuer unless the purchase is at the
  
• fair market value in the ordinary course of the seller’s business
  
• to support an ineligible activity or repay indebtedness related to an ineligible activity; 
  
• to purchase, develop or maintain land or equipment used in the playing or practicing of a sport; and
  
• to support an activity if, in the opinion of the minister, is contrary to public policy, or does not support economic development.
  

Eligible corporations and eligble investors are encouraged to seek legal and tax advice before participating in the SBVCTC program.

The SBVCTC legislation, regulations and application form can be found on the following website: http://www.gov.mb.ca/ctt/busdev/financial/index.html  

Manitoba Contact(s):
Mr. Doug Fyfe
Senior Project Manager
Financial Services
Entrepreneurship, Training and Trade
1040 - 259 Portage Avenue
Winnipeg, Manitoba  R3B 3P4
Telephone: 204-945-5839
Fax: 204-945-1193
Toll-free (information): 1-800-282-8069
E-mail: doug.fyfe@gov.mb.ca