Intake status: Closed – Applications to register with the program are not being accepted.

Ministry responsible: Economic Development, Trade and Tourism

Overview

Effective October 24, 2019, the Alberta Investor Tax Credit program is being phased out, with no additional funding provided after March 30, 2020.

Budget has been allocated to support participants already registered with the program through the transition. Important information for registered participants as well as next steps are outlined on this page.

Please note:

  • New applications to register with the program as an Eligible Business Corporation or Venture Capital Corporation will not be accepted.
  • Any applications to register with the program that were not approved prior to October 24, 2019 will not be processed.

The Alberta Investor Tax Credit (AITC) offers a 30% tax credit certificate to investors who provide equity capital to Alberta small businesses doing research, development or commercialization of new technology, products or processes.

It is also available to businesses engaged in interactive digital media development, video post-production, digital animation or tourism.

Tax credits certificates are available on eligible investments made between April 14, 2016 and December 31, 2019.

To be eligible for a tax credit certificate:

  • a business must have successfully registered with the program prior to October 24, 2019
  • the investor and investment must meet the program requirements
  • transitional budget must still be available

2019-20 Transitional budget

Please note: no additional funding will be available beyond the 2019-20 fiscal year.

The remaining budget is: $0.00

Registered participants

Applications to raise additional equity capital

Effective October 24, 2019, no new applications to raise additional equity capital will be accepted.

Any applications to raise additional equity capital that were submitted but not approved prior to October 24, 2019 will not be processed. This includes both first and subsequent applications to raise additional equity capital.

Venture Capital Corporations that successfully registered with the program but did not receive approval to raise additional equity capital before October 24, 2019 are still eligible to raise the automatically approved maximum of $50,000 (inclusive of the original $25,000 in equity capital that was required at the time of registration) through the program.

Eligible Business Corporations and Venture Capital Corporations that received approval to raise additional equity capital before October 24, 2019 are permitted to continue with their equity raise.

All equity raises through the program must be completed before December 31, 2019. Participants will not be able to apply for tax credit certificates for investments made after that date.

Applications for tax credit certificates

Tax credit certificates will be processed on a first-come, first-served basis, including those that were submitted prior to October 24, 2019.

Once the budget is spent, no additional tax credit certificates will be issued. Tax credit certificates will not be issued for investments made after December 31, 2019.

Applications for tax credit certificates must be submitted by the following dates:

  • December 31, 2019 for investments made in the 2016, 2017 or 2018 calendar years
  • March 30, 2020 for investments made in the 2019 calendar year

All previously issued tax credit certificates remain valid. Unused tax credits may still be carried forward up to 4 additional years.

Investor eligibility

An investor can either invest directly in a registered Eligible Business Corporation, or invest in an approved Venture Capital Corporation.

View a current list of approved Venture Capital Corporations.

A flowchart detailing how the Alberta Investor Tax Credit works.

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 program.

In order to invest into a registered Eligible Business Corporation or an approved Venture Capital Corporation, an investor must be considered an “eligible investor” as per:

For an investor to be eligible for a tax credit certificate under the 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.

In addition, to receive a tax credit certificate for an investment made in an Eligible Business Corporation, eligible investors must not:

  • have sold or otherwise disposed of shares in the Eligible Business Corporation within the previous 2 years prior to the investment date for which the tax credit certificate is requested
  • own more than 50% of voting shares in an Eligible Business Corporation either alone, or in conjunction with, affiliates and/or associates

Diversity and inclusion

The AITC program offers an additional 5% tax credit certificate to Alberta investors who make eligible investments after February 1, 2019 in Eligible Business Corporations that are registered with the AITC program and meet all diversity and inclusion eligibility criteria on the date the investment is made.

Additional information on the diversity and inclusion supplement, including eligibility and process, is outlined in the program guidelines.

Next steps

Step 1. Complete your approved equity capital raise

The sooner an Eligible Business Corporation or Venture Capital Corporation raises the additional equity capital they have been approved for, the sooner they can apply for tax credit certificates and ensure allocation from the transitional program budget.

All equity raises through the program must be completed before December 31, 2019. Participants will not be able to apply for a tax credit certificate for equity capital raised after that date.

The program supports 2 channels of investment. An investor can either:

  • invest directly in a registered Eligible Business Corporation
  • invest indirectly in a small business through the purchase of equity in an approved Venture Capital Corporation

When raising equity capital:

  • an investor is required to purchase shares of an Eligible Business Corporation or Venture Capital Corporation in exchange for Canadian currency
  • any investor (including affiliates) must own less than 50% of the voting shares in the corporation

Equity capital raised under the program by an Eligible Business Corporation, or an eligible business receiving an investment from a Venture Capital Corporation, can be used to establish, operate and/or expand the business.

Equity capital raised under the program cannot be used for:

  • lending
  • payment of debt
  • investment outside of Alberta
  • other prohibited uses of funds outlined in Section 13 (for Eligible Business Corporations) and Section 48 (for Venture Capital Corporations) of the Investing in a Diversified Alberta Economy Act

Eligible Business Corporations

Debt financing and/or in-kind transactions are not eligible for a tax credit certificate.

However, shares issued upon the conversion of debt may be eligible if converted at the principal amount remaining. Accrued interest is not eligible for a tax credit certificate.

Venture Capital Corporations

Venture Capital Corporations are permitted to use debt to make an investment into an eligible small business if the debt instrument meets the requirements outlined in Section 1(4) of the Alberta Investor Tax Credits Regulation.

Registered Venture Capital Corporations are required to pay an amount of money equal to 30% of all amounts received as equity capital into an Investment Protection Account (IPA).

Once the Venture Capital Corporation has made an investment into an eligible small business or plans to use the money to make an eligible investment, the Government of Alberta will authorize a proportionate payment out of the IPA.

Venture Capital Corporations must make timely investments into an eligible business and are required to invest the capital raised within a prescribed period of time.

Please see the program guidelines for additional details.

Step 2. Apply for tax credit certificates

Applications for tax credit certificates must be submitted through the online application portal by the following dates:

  • December 31, 2019 for investments made in the 2016, 2017 or 2018 calendar years
  • March 30, 2020 for investments made in the 2019 calendar year

Tax credit certificates will be approved on a first-come, first-served basis until the budget is fully expended.

Registered Eligible Business Corporations and Venture Capital Corporations are required to apply for tax credit certificates on behalf of their investors for eligible investments.

To apply for a tax credit certificate, Eligible Business Corporations and Venture Capital Corporations must collect information from their investors to complete the Share Purchase Report, which is accessible through the online application portal.

Once the report is complete, the Eligible Business Corporations or Venture Capital Corporations will submit it through the online application portal for the issuance of tax credit certificates.

Eligible Business Corporations

All Eligible Business Corporations registered with the program must be able to provide a complete shareholder register (and/or other information) to demonstrate that:

  • the investor seeking a tax credit certificate has not sold shares in the Eligible Business Corporation in the previous 2 years
  • the investor seeking a tax credit certificate does not control more than 50% of the voting rights to the Eligible Business Corporation either directly or indirectly through associates and affiliates
  • the investor who receives the tax credit certificate holds their shares for the required 5-year period

Measures to enable publically traded companies to meet these requirements may include:

  • creating and issuing a special class of shares for investors who will be requesting tax credit certificate that cannot be sold for period of 5 years
  • holding shares in escrow or with a broker
  • providing assurance that investors who have received a tax credit certificate still hold their shares
  • providing the AITC program with certifications to confirm that the investor(s) is eligible to receive and hold the tax credit certificate

To be eligible for a tax credit certificate, the equity must be newly issued shares from the small business. Traded shares bought on an exchange are not eligible for a tax credit certificate.

Step 3. Delivery of tax credit certificates

Once a tax credit certificate is approved, it goes to the Eligible Business Corporation or Venture Capital Corporation, who is then responsible for distributing it to their investor.

Registered Eligible Business Corporations and Venture Capital Corporations can access and download their investors’ tax credit certificates through their online application portal user account.

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 Investing in a Diversified Alberta Economy Act, AITC Regulation and program guidelines.

Holding requirements

Eligible Business Corporations

Shares issued by the Eligible Business Corporation for which a tax credit certificate was approved must be held (not sold, transferred or redeemed) by the investor for 5 years from the date of issuance.

If the shares are disposed of (sold or transferred) by the investor or redeemed by the Eligible Business Corporation prior to this date, the tax credit certificate will be revoked and the amount of the tax credit certificate must be re-payed.

Venture Capital Corporations

Shares issued by a Venture Capital Corporation must not be redeemed by the Venture Capital Corporation for 5 years from the date of share issuance.

If the shares are redeemed prior to this date, the tax credit certificate will be revoked and the amount of the tax credit certificate must be re-payed.

Reporting requirements

Registered Eligible Business Corporations and Venture Capital Corporations must prepare and file an annual report with the Minister of Economic Development, Trade and Tourism within 6 months following their fiscal year end.

The annual report form will be available through the online application portal and must include the prescribed information as outlined in the program guidelines.

An Eligible Business Corporation must comply with this reporting in each of the 5 consecutive fiscal years following the date of its most recent issue of shares as part of the raising of additional equity capital.

Venture Capital Corporations must submit an annual report for each year they are registered with the program.

If an Eligible Business Corporation or Venture Capital Corporation fails to comply with the annual reporting requirements, the tax credit certificates issued to their investors will be revoked and the Eligible Business Corporation or Venture Capital Corporation will be required to re-pay the amount of the tax credit certificates back to the Government of Alberta.

Other requirements for Venture Capital Corporations

Venture Capital Corporations must meet the minimum equity capital requirement of $50,000 by the end of their first year after the date of registration.

Venture Capital Corporations are also required to invest the capital raised into eligible small businesses within specified periods of time and maintain the required amounts in eligible investments for a period of 5 years.

These requirements are outlined in the section 10 of the Investing in a Diversified Alberta Economy Act and section 4 of the Alberta Investor Tax Credits Regulation.

The Venture Capital Corporation must maintain these required amounts in eligible investments for a period of 5 years.

Additional program details

For more information on the AITC please refer to the:

AITC Forms:

Contact

Connect with the AITC program:
AITC.program@gov.ab.ca