EBC (Eligible Business Corporation) Tax Credit Program
EBC (Eligible Business Corporation) Tax Credit Program Overview
The EBC Tax Credit Program, governed by the Small Business Venture Capital Act and administered by the Investment Capital Branch (ICB) within BC's provincial Ministry of Jobs, Trade, and Technology, has been in operation since 2003. This program offers a 30% tax credit to BC investors who invest in eligible businesses.
Benefits for Investors: From the investor's perspective, starting a small business can entail financial risks. However, by investing directly in an eligible business under the EBC program, these risks can be mitigated.
Benefits for Corporations: For corporations, expanding their current business can be challenging, especially during the early stages when venture capital is crucial. The EBC program serves as a solution to these challenges by providing access to capital.
Eligibility Criteria for Businesses: To become an Eligible Business Corporation, BC companies must meet specific criteria related to the type of business they operate and their company structure:
EBC Eligible Types of Business: EBCs are defined as BC corporations engaged 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: In addition to the type of business, there are structural requirements for a company to qualify as an EBC. Generally, to be eligible, a company must:
Be registered to do business in BC
Maintain a permanent place of business in BC
Employ no more than 100 individuals
Pay at least 75% of annual wages and salaries to BC employees
Be "substantially engaged" in one or more qualified activities
Hold at least 80% of its assets within BC
Possess at least $25,000 in equity capital
Becoming a Qualified Investor: Individuals or corporations required to file a BC tax return can claim an EBC tax credit. Individual investors can invest up to $400,000 per year, while corporations have no such limit. EBC tax credits for individuals are refundable, whereas those for corporations are non-refundable. Both types of investors can carry forward any unused tax credits for up to four subsequent years. Importantly, investors must not individually control the EBC, which means they should not hold 50% or more of the votes for the election of directors, either on their own or in combination with their associates or related parties.
Taking Advantage of the EBC Tax Incentive Program: The EBC program is a potent tool for companies seeking business growth and for investors looking to receive tax credits in BC. The Eligible Business Corporation Tax Credits page provides a concise overview of the program, including EBC requirements, the claim process, and frequently asked questions.
Contact us to learn whether your business can take advantage of the VCC EBC Program.