Author: Graham Purse, Kristél Kriel
In the 2018-19 Saskatchewan Budget, Saskatchewan announced a new Saskatchewan Technology Start-Up Incentive (STSI) Program aimed at the rapid growth and success of newly-emerging technology companies in Saskatchewan.
This blog explains the program and the legal tools that MLT Aikins has available to assist organizations and individuals interested in the program.
The STSI Program
The STSI Program is designed to provide investors with a non-refundable tax credit equal to 45% of qualifying new investments made in an “Eligible Small Business.”
There are four basic requirements in order for an Eligible Small Business (ESB) to qualify for the program:
- The ESB must be involved in the development of new technologies or applying existing technologies in a new way to create proprietary new products, services or processes that are repeatable and scalable;
- The ESB must have less than 50 employees;
- The ESB must be incorporated and headquartered in Saskatchewan; and
- The majority of staff of the ESB must be located in Saskatchewan.
Either accredited (e.g. local investment fund managers and fund institutions) or non-accredited investors can qualify. Investors who make an approved ESB investment will receive an eligibility certificate from Innovation Saskatchewan, which may, in turn, be used to claim the STSI tax credit.
For example, where a $500,000 investment is made in an ESB under the STSI Program, the maximum STSI tax credit would be $225,000 (or 45%) in respect of that investment. The investor can claim up to $140,000 of those tax credits per year, with unused credit amounts being carried forward up to four years. There are also minimum holding requirements of two years for investments in an ESB to qualify (i.e. the ESB cannot be acquired, go public or leave Saskatchewan within that two-year period).
The STSI Program is being launched as a two and a half year pilot program, at which point its effectiveness will be evaluated.
Before the STSI Program comes into effect, legislation will need to be passed to implement the budget. At the time of writing, such legislation was in the works but not yet available for review. As such, the final operation of the STSI Program may differ slightly from the description in the budget.
It is expected that the STSI Program will be available on September 1, 2018, with retroactive effect to April 10, 2018.
MLT Aikins Tech Startup Program
MLT Aikins has developed a Tech Startup Program to support technology and science based businesses and companies. This program includes several pre-paid packages of legal documents, services and educational material. The packages focus on various stages and aspects of the journey that a science and technology entrepreneur must take from a great idea to operating a great business (from structuring the business including incorporation to protecting intellectual property to relationships with stakeholders). Further, the program offers technology start-ups the legal support they need to move their business forward at a fixed price.
The MLT Aikins Taxation Team has significant experience with advising organizations and individuals to integrate tax advice into their plans for personal and business success. The MLT Aikins Science and Technology Team understands the law, the technology and the science, and understands how to bring them together to help organizations and individuals to succeed.
Investors and tech start-ups (organizations and individuals) who are interested in learning more about the STSI Program or the Tech Startup Program are encouraged to contact us for more information.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.