If you are an investor who is willing to invest in British Columbia (BC) and receive certain benefits such as funding, or if you are a business corporation that is looking for government programs to raise capital and create more job opportunities, then look no further than the Eligible Business Corporation (EBC) Tax Credit. Here is why EBC might be the best choice to turn investors into a capital in BC.
What is EBC (Eligible Business Corporation) Tax Credit Program?
The EBC program is governed by the Small Business Venture Capital Act and administered by the Investment Capital Branch (ICB) of BC’s provincial Ministry of Jobs, Trade and Technology. Since 2003, BC investors invested in EBC have been eligible to receive a 30% tax credit for such investment.
- From the investor’s perspective, starting a small business involves financial risks, but investing directly in an eligible business will help to reduce those risks.
- From the corporation’s perspective, expanding its current business is challenging, so early-stage venture capital is needed.
The EBC program will solve both of above problems.
Who can become an Eligible Business Corporation?
There are plenty of requirements for BC companies to be qualified as EBCs. Those requirements can be divided into two parts: type of business and company structure.
EBC Eligible Type of Business
According to the official document, EBCs are defined as BC corporations that participate in one of the following activities:
- Manufacturing and processing of goods
- Research and development of proprietary technology
- Destination tourism
- Development of interactive digital media products
- Development of clean technology
- Advanced commercialization
EBC Eligible Company Structure
If your company engages in one of the activities above, there are additional requirements for your company structure. Generally speaking, in order to be qualified as an EBC, your company needs to:
- Be registered to do business in BC;
- Have a permanent place of business in BC;
- Have no more than 100 employees;
- Pay at least 75% of annual wages and salaries to BC employees;
- Be “substantially engaged” in one or more qualified activities;
- Have at least 80% of assets located within BC; and
- Have at least $25,000 in equity capital.
How to become a qualified investor of the EBC Program?
An individual or corporation required to file a BC tax return can claim an EBC tax credit. Individual investors may invest up to $400,000 per year, while corporation investors have no limit. Furthermore, EBC tax credits for individuals are refundable, while those received by corporations are non-refundable. Both investors may carry forward unused tax credits for four subsequent years. Please also keep in mind that the investor must not control the EBC individually (50% or more of the votes for the election of directors), or in combination with the investor’s associates or related parties.
Take advantage of EBC Tax Incentive Program
The EBC program is a powerful tool for companies looking for business growth and investors willing to receive tax credits in BC. The Eligible Business Corporation Tax Credits page provides a quick overview to the program, such as EBC requirements, claim process and FAQs.
If you are interested in applying for EBC or getting tax credits, fundings for your investment in BC, please get in touch with EBC professional consultants in BC to help you with the successful EBC tax credit claim.