Alberta Investor Tax Credit (AITC)
Tax credit to encourage investment in non-traditional sectors with strong job-creation potential.
Last year we created the Alberta Investor Tax Credit (AITC) when Bill 30, the Investing in a Diversified Alberta Economy Act passed unanimously at the Alberta Legislature. Applications opened in January, and since then we've heard from business and investment leaders about how we could make the credit work better.
On April 11, amendments to the AITC regulation were approved that:
- clarify requirements around articles of incorporation
- clarify eligibility requirements for venture capital corporations, and
- extend eligibility to companies that have received investments from venture capital corporations funded by the Alberta Enterprise Corporation.
Remaining budget for 2017-18*
This year's application intake for the AITC program will remain open until the annual budget has been fully allocated.
The remaining budget is: $16,745,731
As part of the Alberta Jobs Plan, the Alberta government has invested $90 million towards an Alberta Investor Tax Credit (AITC) to encourage investment in non-traditional sectors with strong job creation potential.
The 3-year AITC is applicable across sectors, offering a 30% tax credit to investors who provide capital to Alberta small businesses doing research, development or commercialization of new technology, new products or new processes. It is also applicable to businesses engaged in interactive digital media development, video post-production, digital animation or tourism.
Businesses interested in registering with the AITC program are required to do so through the online application portal. Investments made as of April 14, 2016, may be retroactively eligible for the AITC.
An investor can either invest directly in an Eligible Business Corporation (EBC), or invest in an Approved Venture Capital Corporation (VCC).
View an updated list of Approved Venture Capital Corportations.
Venture Capital Corporations (VCCs)
In order to be eligible to register under the AITC as a Venture Capital Corporation (VCC), a business must:
- be incorporated under the Alberta Business Corporations Act
- have not previously carried on business
- have or will have equity capital of at least $25,000 at the time of registration
- have a share structure consisting of only common shares that have no special rights or restrictions and/or common shares that have rights or restrictions relating only to the redemption of the shares by the corporation
- have articles of incorporation that restrict its business to assisting the development of eligible small businesses, as directed in the AITC Regulations (0.4 MB)
VCCs are eligible to apply for the AITC so long as the VCC:
- has not received any investments from investors
- has not made any investments into businesses
- complies with all other requirements set out in the Act
Eligible Business Corporations (EBCs)
In order to be eligible to register under the AITC as an Eligible Business Corporation (EBC), a business must:
- have no more than 100 employees, including affiliates
- be incorporated or continued under the Business Corporations Act of Alberta
- if exporting, pay at least 50% of wages to employees who report to work in Alberta
- if non-exporting, pay at least 75% of wages to employees who report to work in Alberta
- have more than 80% of assets located in Alberta
- have at least $25,000 in equity capital
Businesses must also be substantially engaged (at least 50% of the company’s activities) in:
- research, development, or commercialization of new technology, new products or new processes
- interactive digital media and game product development
- video post-production
- visual effects and digital animation
- tourism activities
Additional information on eligibility criteria as well as eligible business activities are outlined in the program guidelines (0.3 MB).
Eligibility for investors is limited to investors who pay personal or corporate taxes in Alberta and invest in small businesses in Alberta.
Both individuals and corporations are able to invest under the AITC.
In order to invest into an Eligible Business Corporation (EBC) or Venture Capital Corporation (VCC), an investor must be considered an “eligible investor” as per:
- section 35.01 of the Alberta Personal Income Tax Act (0.5 MB) for an individual, or
- section 5 of the Alberta Corporate Tax Act (1.0 MB) for a corporation.
For an investor to be eligible for a tax credit under the AITC program, the business they are investing in must also be substantially engaged (at least 50% of the company’s activities) in any of the activities described in the program overview above.
The AITC a first-come, first-served process. Applicants can fill out and submit their applications for 2017 through the online application portal as of January 16, 2017. Once the 2017 AITC budget has been allocated, the online application portal will close and reopen in 2018 with a new budget.
Start dates for the AITC's 2018 and 2019 annual intake will be shared once finalized.
For more details on the type of information applicants are required to provide as part of their application for EBC and VCC registration, please refer to:
Step 1. Create a user account and log in through the online application portal
Step 2. Register as a VCC or EBC
Starting January 16, 2017, businesses applicants are required to register with the AITC program as either a VCC or an EBC.
To register, the applicant is required to complete a registration form. In order to be successfully registered, the applicant will be evaluated against the eligibility criteria. If the eligibility requirements are met, a certificate of registration will be provided to the applicant within 30 days of the date of registration.
Step 3. Apply for approval to raise additional equity capital
After successful registration with the AITC program, VCCs and EBCs are required to submit applications to raise additional equity capital.
- Registered EBCs are required to apply for approval to raise all additional equity capital.
- Registered VCCs are automatically approved to raise equity capital up to $50,000 by the end of the first year after the date of registration. In order to raise additional equity capital above $50,000 the corporation must apply for approval.
Step 4. Raise equity capital
The sooner the VCC raises equity capital and invests it into eligible small business, the sooner they can apply to receive approval for the Tax Credit Certificates and ensure allocation from the budget.
The sooner the EBC raises equity capital, the sooner they can apply to receive approval for the Tax Credit Certificates and ensure allocation from the budget.
Step 5. Apply for Tax Credit Certificates
Registered VCCs and EBCs are required to complete and submit a Share Purchase Information Form to apply for Tax Credit Certificates on behalf of their investors for eligible investments.
The sooner the VCC or EBC raises equity capital, the sooner they can apply to receive approval for the Tax Credit Certificate.
Tax Credit Certificates will be granted on a first-come, first-served basis until the annual budget is fully allocated.
Updates on remaining funds available through the AITC budget will be publically available.
Step 6. Delivery of Tax Credit Certificates
Tax Credit Certificates will be issued starting January 2018.
The tax credit certificates will be provided to the VCCs and EBCs who are responsible for distributing them to their investors.
After you apply
How applications will be evaluated
AITC program staff will thoroughly evaluate applications to ensure they meet the eligibility requirements outlined in the program guidelines (0.3 MB).
Registered VCCs and EBCs must prepare and file an annual report with the Minister of Economic Development and Trade within 6 months following its fiscal year end.
The annual report form will be available through the online application portal starting early 2017 and must include the prescribed information as outlined in the program guidelines (0.3 MB).
Additional program details
For more information on the AITC please refer to the:
- Investing in a Diversified Alberta Economy Act
- Regulation (0.4 MB)
- Information bulletin (0.1 MB)
- AITC program guidelines (0.3 MB)