INVESTMENT INCENTIVES -

Generally, Canadian companies are expected to be self-supporting, but for companies involved in export development, there are several types of investment incentive programs which are designed to assist investment in new Canadian business initiatives. In fact, Canada is one of the top-ranked countries in the world for investment opportunities. Various levels of government have direct and indirect assistance programs which can involve capital grants or loans or may involve job training supplements. Alternatively, a tax credit system has been established which may effectively permit acceleration of deductibility for capital expenses which might otherwise only be amortized over an extended period.

PROGRAM REQUIREMENTS -

Eligibility for most direct incentive programs is often limited to companies incorporated under federal or provincial laws. Capital grants are generally available only for manufacturing or processing projects. Various provinces have targeted industry segments such as tourism projects for eligibility for an indirect capital grant which gives a rebate to shareholders taking minority positions. Labour-sponsored venture funds provide a new source of venture capital in some provinces by providing individual investors with tax credits to encourage investment. Some municipalities provide incentives for locating a new enterprise within their boundaries. These are negotiated on an individual basis.

Often government assistance is available only where it is demonstrated that traditional private-sector financing cannot be obtained. Accordingly, unless a project is industry-specific or designed to be implemented in a geographical area designated as eligible for assistance, an applicant for assistance often walks the fine line of asserting a project’s viability while demonstrating that no financial institution will provide the necessary funds.

Please see full Chapter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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