Small business venture capital tax credit

The small business venture capital tax credit is for corporations that invest in shares of a registered venture capital corporation or eligible business corporation.

The small business venture capital tax credit encourages investors to make equity capital investments in B.C. small businesses, in order to give small businesses access to early-stage venture capital to help them develop and grow.

Effective for the 2022 to 2024 calendar years, Budget 2022 proposes to increase the annual maximum venture capital tax credit from $38.5 million to $41 million. Budget 2022 also proposes to allocate this $2.5 million increase to investments made in clean technology businesses.

Corporations may claim a tax credit in a tax year equal to the lesser of: 

• The amount of the tax credit certificate issued by the administrator of the venture capital corporation or eligible business corporation programs, or

• Provincial income tax otherwise payable

Budget 2019 enhanced the venture capital tax credit program under the Small Business Venture Capital Act.

The small business venture capital tax credit may be applied only to provincial income taxes payable. If you cannot apply your entire tax credit amount to B.C. taxes payable in the year, the excess may be carried forward up to four years.

• Read more about the venture capital tax credit program as well as other investment capital programs.

Claiming the credit

You can claim the credit when you file your T2 Corporation Income Tax Return. Enter the amount of the credit you are claiming on line 656, and complete lines 880, 881 and 882 if applicable of Schedule 5, Tax Calculation Supplementary – Corporations.

Legislation

The following legislation applies to the small business venture capital tax credit:

• Income Tax Act (B.C.) Section 21 
• Small Business Venture Capital Act 
• Small Business Venture Capital Regulation