Ottawa, November 27, 2013
Archived - The Department of Finance Releases Technical Proposals to Assist With the Orderly Phase-Out of the Federal Labour-Sponsored Venture Capital Corporations Tax Credit
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- Backgrounder: Labour-Sponsored Venture Capital Corporations Transition Rules
- Legislative Proposals Relating to Income Tax and Explanatory Notes
The Department of Finance today released for consultation a package of draft technical legislative proposals for changes to the Income Tax Act and Income Tax Regulations to assist with the orderly phase-out of the federal Labour-Sponsored Venture Capital Corporations (LSVCC) tax credit.
The 2013 federal budget announced the phase-out of the federal LSVCC tax credit by 2017. In order to assist with the orderly phase-out, public consultations on the tax rules governing LSVCCs were launched on May 23, 2013 and concluded on July 23, 2013. The Department of Finance sought public input on potential technical changes to the rules related to investment requirements, wind-ups, redemptions, and other rules governing the operation of LSVCCs.
Based on the feedback received during the consultations, the Government is proposing technical transition rules to facilitate the orderly exit 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.
In addition, the Department of Finance will accommodate any technical, coordinating changes to provincial legislation meant to facilitate the orderly phase-out of the federal LSVCC tax credit.
The attached backgrounder outlines the key measures proposed in today’s package.
References to “Announcement Date” in the draft legislative proposals and the accompanying explanatory notes are to be read as references to today’s date.
Interested parties are invited to provide comments on the draft legislative proposals by January 27, 2014. The Government will introduce legislation at an early opportunity to implement the legislative proposals, taking into account comments received.
Comments can be sent to LSVCC-SCRT@fin.gc.ca or to:
Tax Policy Branch
Department of Finance
140 O’Connor Street
For further information, media may contact:
Office of the Minister of Finance
Department of Finance