Global

Details

  • Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 12/5/2013

Canada - Phase-out of labour-sponsored venture tax credit 

December 5: Canada’s Department of Finance released draft legislation to provide transitional relief for taxpayers affected by the phase-out of the federal Labour-Sponsored Venture Capital Corporations (LSVCC) tax credit by 2017.

The four-page package of amendments was released in late November 2013, and Finance is asking for comments on the amendments by 27 January 2014.

Background

The 2013 federal budget announced the phase-out of the federal LSVCC tax credit by 2017. This spring, Finance held public consultations on the tax rules governing LSVCCs on potential technical changes to the rules related to investment requirements, wind-ups, redemptions, and other rules governing the operation of LSVCCs.

Transition rules

Based on the feedback received during the consultations, Finance is proposing technical transition rules to facilitate the phase-out of federally registered LSVCCs from the LSVCC tax credit program. The Government is proposing to:


  • Remove investment requirements and penalties for federally registered LSVCCs that give notice of their intent to exit the program
  • Subject to the approval of the Minister of Finance, allow federally registered LSVCCs to issue new classes of shares that would not be subject to the investment rules applicable to LSVCCs but would not attract the federal LSVCC tax credit

Read a December 2013 report prepared by the KPMG member firm in Canada: Finance Eases Phase-Out of Labour Tax Credit




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