April 2015 Newsletter

Phase-out of LSVCC credit

The federal income tax credit for investments in a Labour-Sponsored Venture Capital Corporation (LSVCC) is being eliminated, effective for the 2017 year. Generally speaking, LSVCCs are mutual fund corporations that are sponsored by labour unions or organizations and that typically invest in small, start-up businesses. The federal government announced in the March 2013 Budget that the LSVCC program is no longer considered effective and will be phased out.

Historically, you obtained a 15% federal tax credit for purchasing up to $5,000 of LSVCC shares per year for a maximum credit of $750. As part of the phase-out and elimination of the credit, it is reduced to 10% ($500) for 2015 and 5% ($250) for 2016 and will be gone by 2017.

Of course, many LSVCCs are leaving the LSVCC regime and may continue on in some other form. As a result, the government has introduced rules under which an LSVCC can “orderly exit” the federal tax credit program. Basically, the proposals will remove investment requirements and penalties that may otherwise apply to LSVCCs.

Last modified on May 1, 2015 12:00 am
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