Reinstate the Alberta Investment Tax Credit

Issue

The development of the “non-traditional” sectors of Alberta’s economy has traditionally been a significant challenge for entrepreneurs who have chosen to bring their business concepts to market in Alberta. The most significant challenge for emerging businesses has largely been access to capital to support business sustainability in the developmental years of an emerging venture. The introduction of the Alberta Investment Tax Credit (AITC) provided an opportunity to attract non-government investment at a nominal cost to the provincial purse. A reinstatement of this tax credit would simply place Alberta entrepreneurs on a similar footing with competing jurisdictions with a nominal cost to the fiscal purse. 

Background

The AITC was introduced on January 1, 2017, as a component of the Investing in a Diversified Economy Act, which had a stated objective of boosting investment in Alberta’s small and medium sized businesses, drive innovation, diversify the economy and create new jobs outside of the traditionally dominant oil and gas industry and broader resource sector. The operation of the AITC program was relatively straightforward as it provided eligible individual and corporate investors in emerging corporations substantially engaged in “eligible business activities” (which includes research, development and commercialization of proprietary technologies) with a 30% non-refundable tax credit to be applied against Alberta income tax payable by the individual or corporation. The credit was structured in a manner that would allow for unused credits to be carried forward up to 5 years by the individual or corporate investor.

Our Recommendations

1. Work with subject matter experts to effectively design a streamlined application and approval process with respect to renewed Alberta Investment Tax Credit program; 
2. Reinstate the Alberta Investor Tax Credit program with the requisite changes necessary to streamline the implementation and administration of the program; and, 
3. Commit to re-evaluating the program at the end of the program term with the option to extend the program on an annual basis.