The Small and Medium Enterprise (SME) Investment Tax Credit Act (30th Legislature, 1st Session)

Bill 20 (30L1S)

Saskatchewan — Bills

BILL No. 20

An Act respecting the Small and Medium Enterprise (SME) Investment Tax Credit TABLE OF CONTENTS

PART 1 Preliminary Matters 1

Short title 2

Definitions 3

Interpretation

PART 2 Eligible Businesses 4 Registration as an eligible business 5 Register of eligible businesses 6 Raising equity capital as an eligible business 7 Limits on equity capital for eligible businesses 8 Control of eligible business 9 Application for tax credit certificates 10 Issuance and revocation of tax credit certificates 11 Limit on money forgone by tax rebate 12 Prohibited use of funds 13 Revocation or suspension of registration 14 Restrictions on registration of share transfers 15 Consequences of revocation 16 Liability of third party 17 Voluntary cancellation of registration 18 Repayment of tax credit amount on early redemption, acquisition or cancellation 19 Annual return

PART 3 Venture Capital Corporations 20 Registration as a venture capital corporation 21 Register of venture capital corporations 22 Restrictions re share structure and articles 23 Requirements for venture capital corporations 24 Investment in eligible business 25 Investment for certain purposes prohibited 26 Control of business – prohibitions 27 Non-arm’s length investment prohibited 28 Aggregate investment by venture capital corporation 29 Action to be taken if investment becomes prohibited 30 Tax credit certificates 31 Repayment of tax credit amounts 32 Voluntary cancellation of registration 33 Repayment on revocation, dissolution, amalgamation or cancellation 34 Revocation or suspension of registration, other enforcement measures 35 Annual return

PART 4 Administration and Enforcement 36 Change in circumstances 37 Record keeping requirements 38 Power to require information or material 39 Inspectors 40 Routine inspection 41 Warrant 42 Copies of records 43 Cooperation with inspectors 44 Offences and penalties 45 Recovery 46 Limitation on prosecution

PART 5 General 47 Immunity 48 Service of notice or documents 49 Confidentiality 50 Regulations

PART 6 Coming into Force 51 Coming into force

SMALL AND MEDIUM ENTERPRISE (SME) INVESTMENT TAX CREDIT ACT 2 (Assented to ) HIS MAJESTY, by and with the advice and consent of the Legislative Assembly of Saskatchewan, enacts as follows:

PART 1 Preliminary Matters

Short title 1 This Act may be cited as The Small and Medium Enterprise (SME) Investment Tax Credit Act.

Definitions 2 In this Act: “affiliate” means an affiliate as defined in The Business Corporations Act, 2021; “common interest group”, with respect to a corporation, means 2 or more persons, whether or not associated or affiliated, who, under an agreement, commitment or understanding, exercise, or intend to exercise, in concert, any rights attached to or associated with their shares; “eligible business” means a business registered pursuant to

section 4; “eligible investment” means an investment permitted pursuant to

section 6; “eligible investor” means a prescribed person or prescribed class of persons; “equity capital” means the consideration in money received: (

a) by a corporation for its issued shares before or after its registration pursuant to

section 20 as a venture capital corporation; or (

b) by a business for its issued equity shares; “equity share” means: (

a) a share or a class of shares, whether or not the share carries voting rights, but does not include a share having prescribed rights and restrictions; (

b) any warrant, option or right entitling the holder to purchase or acquire a share mentioned in clause (a); or (

c) any other prescribed security; “inspector” means a person appointed or designated pursuant to

section 39; “major shareholder” means a person who holds 10% or more of the voting rights attached to all equity shares of an eligible business or venture capital corporation for the time being outstanding; “minister” means the member of the Executive Council to whom for the time being the administration of this Act is assigned;

SMALL AND MEDIUM ENTERPRISE (SME) INVESTMENT TAX CREDIT ACT 3 “ministry” means the ministry over which the minister presides; “prescribed” means prescribed in the regulations; “related persons” means related persons as defined in the Income Tax Act (Canada); “third party” means: (

a) a director or officer of an eligible business; (

b) a member of a common interest group that controls an eligible business; or (

c) a majority shareholder of an eligible business; “venture capital corporation” means a corporation registered pursuant to

section 20.

Interpretation 3(1) For the purposes of this Act and the regulations, except if they are at variance with the

definitions and

interpretations contained in this Act or the regulations, the

definitions and

interpretations contained in or made by or pursuant to the Income Tax Act (Canada) or The Income Tax Act, 2000 apply.

(2) If there is any conflict between the

definitions or

interpretations found in the Income Tax Act (Canada) and those found in The Income Tax Act, 2000, the

definitions or

interpretations found in The Income Tax Act, 2000 prevail.

PART 2 Eligible Businesses Registration as an eligible business 4(1) A business may apply, on or before June 30, 2028 or any later date that may be set by the Lieutenant Governor in Council, to the minister in an approved form and manner to be registered as an eligible business.

(2) The minister shall register the business if the minister is satisfied that the applicant is a business that, as of the date on which the application is submitted, meets the prescribed requirements.

(3) On the registration of a business as an eligible business pursuant to subsection (2), the minister shall issue a certificate of registration containing the prescribed information.

(4) If the minister determines that the business does not meet the criteria mentioned in subsection (2), the minister shall: (

a) inform the business in writing specifying the reasons that the business is ineligible; and (

b) provide the business with an opportunity to make representations respecting the minister’s determination.

SMALL AND MEDIUM ENTERPRISE (SME) INVESTMENT TAX CREDIT ACT 4 Register of eligible businesses 5(1) The minister shall maintain a register of eligible businesses approved pursuant to

section 4.

(2) The minister may cause the register mentioned in subsection (1) to be published in any manner that the minister considers appropriate, including publishing the register on the ministry’s website.

(3) The register mentioned in subsection (1) must contain the prescribed information related to each eligible business. Raising equity capital as an eligible business 6(1) An investment in an eligible business is an eligible investment if: (

a) the equity shares issued: (

i) are directly issued by the eligible business; (ii) are purchased by an eligible investor; (iii) do not have the prescribed rights or restrictions; (iv) do not establish control by an eligible investor over the eligible business pursuant to

section 8 or 26; and (

v) are fully paid for in cash; (

b) the investment meets the prescribed minimum investment threshold for individuals and corporations; and (

c) the investment is made on or before June 30, 2028.

(2) No equity shares shall be issued to a person that, at any time during the 2 years before the date of issue, has disposed of a share or any class of shares issued by the eligible business. Limits on equity capital for eligible businesses 7(1) An eligible business must not raise equity capital pursuant to

section 6 that exceeds the prescribed amount.

(2) For the purposes of subsection (1), if the minister determines that one of the reasons for the separate existence of 2 or more eligible businesses is to increase the amount of equity capital raised, the minister may deem the eligible businesses to be 1 eligible business.

(3) If the minister makes a determination pursuant to subsection (2), the minister shall: (

a) give notice of that determination to the eligible businesses to which that determination applies; and (

b) provide the eligible business with an opportunity to make representations respecting the minister’s determination.

SMALL AND MEDIUM ENTERPRISE (SME) INVESTMENT TAX CREDIT ACT 5 Control of eligible business 8(1) Subject to subsection (2), an eligible investor must not make or hold an investment in an eligible business if the eligible investor, either alone or in conjunction with one or more of the prescribed related persons: (

a) would own, directly or indirectly, shares carrying 50% or more of the voting rights for the election of directors of the eligible business; or (

b) would, in any manner, control the eligible business.

(2) If the minister considers that an eligible business in which an eligible investor has invested is in financial difficulty, the minister may, by order, authorize the eligible investor to temporarily control the eligible business, under the circumstances and on the terms and conditions that the minister determines. Application for tax credit certificates 9(1) Subject to subsections (2) and (4), subsection 7(1) and

section 11, an eligible business may apply to the minister for a tax credit certificate entitling each eligible investor in that eligible business to a tax rebate up to a maximum of 45% of the amount received from that investor by the eligible business for shares issued pursuant to

section 6.

(2) The maximum annual investment in an eligible business for which a tax credit certificate may be issued with respect to any eligible investor is $500,000.

(3) If a business that becomes an eligible business in 2025 has issued equity shares to a person on or after July 1, 2025 that meet the requirements of

section 6, those equity shares are deemed for the purposes of that

section to have been equity capital raised in 2025.

(4) No applications are to be submitted or accepted pursuant to this

section after June 30, 2029. Issuance and revocation of tax credit certificates 10(1) On the receipt of an application mentioned in subsection 9(1), the minister shall, if the prescribed conditions are met, issue a tax credit certificate in the amount of the rebate mentioned in that subsection to each of the eligible investors mentioned in that subsection.

(2) If the minister refuses to issue a tax credit certificate pursuant to this section, the minister shall give notice within 30 days after that refusal, together with reasons for the refusal, to the eligible business.

(3) The minister may revoke a tax credit certificate issued pursuant to this

section if the minister determines that, at the time the tax credit certificate was issued or at a subsequent time, the eligible business was in contravention of this Act or the regulations.

(4) If the minister revokes a tax credit certificate issued pursuant to this section, the minister shall promptly give notice of that revocation, together with reasons for the revocation, to the eligible business and to the minister responsible for the administration of The Income Tax Act, 2000.

SMALL AND MEDIUM ENTERPRISE (SME) INVESTMENT TAX CREDIT ACT 6 Limit on money forgone by tax rebate 11(1) If, in the minister’s opinion, the number of eligible businesses and venture capital corporations registered pursuant to this Act will be sufficient to take up the prescribed amount of money that is forgone by way of tax credit, the minister may, by order, suspend the issuance of tax credit certificates.

(2) An order issued pursuant to subsection (1) may be in force for any period that the minister may specify in the order.

(3) No order made pursuant to subsection (1) operates to prevent the minister from allowing a tax rebate if the eligible investment was fully paid for and beneficially owned by the eligible investor before the making of the order. Prohibited use of funds 12 An eligible business must not use for any prescribed purposes, directly or indirectly, any equity capital raised by an issue of equity shares for which tax credits have been or are entitled to be cla

Document details

Collection	Saskatchewan — Bills
Citation	Bill 20 (30L1S)
Type	bill
Volume / chapter	30L1S Bill30 20.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	87cc27d5a3bfa1290cdec7ea98fb0cd7d5cd5625

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