FOR IMMEDIATE RELEASE
BioNova, Grant Thornton and Cox & Palmer Propose Updates to N.S. Tax Credit to Boost Investment in Startups
November 6, 2019 – Halifax, Nova Scotia – BioNova, Grant Thornton and Cox & Palmer
BioNova, the organization leading the economic growth of the Health and Life Sciences sector in Nova Scotia in collaboration with Grant Thornton and Cox & Palmer have announced the launch of a report to advance the Innovation Equity Tax Credit (IETC) to better serve the interests of local businesses, the investment community, and the province’s economic development objectives. The announcement was made at BioNova’s 18th annual BioPort Atlantic conference, the largest health and life sciences conference east of Montreal.
This is the second time that BioNova and industry partners have provided recommendations to the province to evolve the tax credit, many of which were adopted with the launch of the new and improved IETC back in January. This has led to welcomed changes for many companies in Nova Scotia, as the attraction of capital has been a long-standing issue for emerging businesses.
“Great strides have been made and we believe there are still opportunities available to further improve and refine the IETC that will have a long-term positive impact on our economy and for the health and life sciences sector,” said Scott Moffitt, Executive Director of BioNova.
There are thirteen new recommendations listed in the report including an update which will allow directors, founders, and other investors with a vested interest in the company to benefit from the tax credits where they are currently excluded. The report also recommends providing early stage companies an opportunity to pivot their business plan if it will increase their chances of success while still being eligible for the IETC.
BioNova advocates on behalf of the sector for initiatives that are important to attract investment to the province. The IETC encourages investors to make equity capital investments in eligible Nova Scotian small and medium corporations, who are engaged in innovative activities that contribute to inclusive economic growth and increase investment in innovation.
“The Innovation Equity Tax Credit changes that were announced in January of 2019 and referenced again in the provincial budget for 2019/20 made a significant impact on the amount of local funds raised in our most recent offering. We were encouraged to see local investors benefit from the new changes. We truly believe that these are the types of significant improvements that are needed to ensure the success of technology-based businesses like ours, so we look forward to this trend continuing.”
– Peter Hickey, Co-founder and Executive Director, IR Scientific
“We’re hoping that our efforts to improve the business climate in Nova Scotia for innovation-driven entrepreneurship by doing things differently will continue to support economic growth in the province.”
–Gerry Lacroix, Partner, Grant Thornton
View the full report “Continuing the Advantage: INNOVATION EQUITY TAX CREDITS and Stimulating Innovative Companies” here
BioNova leads the economic development of Nova Scotia’s growing health and life sciences sector. Since 1993, BioNova has been accelerating the growth of its member companies to commercialize life-changing research to improve healthcare, provide healthier food, and develop sustainable solutions. BioNova champions the sector’s cluster of world-class research facilities, incubator programs, and companies who, together, bring investment and jobs to Nova Scotia.
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Marketing Manager, BioNova
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The investment tax credit discussion in Atlantic Canada has been intensifying lately, and now Senator Colin Deacon is taking up the cause. These provincial taxation measures give private investors a tax break if they invest in approved companies. All four Atlantic provinces now offer these credits, as do most Canadian provinces and American states. Players in the startup community have been pushing for improvements for ages – a position I’ve advocated for in this column several times over the years. Those calls are now intensifying. In June, a group headed by Atlantic Canada Opportunities Agency exec James Curry issued a discussion paper recommending these credits be harmonized and be offered to investors outside a company’s home province. And now Deacon, a serial entrepreneur named to the Senate last summer, is pushing for similar changes. “A good startup ecosystem needs a good angel group,” said Deacon in an interview last week. “Equity tax credits are a great way for governments to leverage their investment in startups . . . through private investments.” He argues that equity tax credits (the name of the Nova Scotian program; each province has its own name for them) help to generate recurring waves of new companies year after year. That ensures the startup community keeps growing. The main problem is that each province grants the credit only to taxpayers who live in that province. This means the credits can attract only a small pool of investors – exceptionally small in dollar terms given that there is less wealth in Atlantic Canada than in other parts of the continent. Traditional Businesses are Linking up with Startups, to their Mutual Advantage Curry’s paper – co-written by BioNova head Scott Moffitt, Ogden Pond CEO Sean Sears, and Grant Thornton tax partner Keith MacIntyre – recommends that Atlantic Canada “regionalize” investment tax credits. That means the rules would be uniform across the region. (New Brunswick currently has the most generous tax credit by a long shot.) And it would mean investors in one province could receive a credit for funding a company in another province. Deacon and the paper’s authors even want the credits to reward investors who live outside the region. Some American states such as Arkansas and Minnesota already allow external investors to benefit from their tax credits. The thinking is that it’s more important to get money into growing companies than be concerned about where the investor is based. So far, the talk about enhanced credits is just that – talk. But there is more talk than a few years ago. (BioNova and Grant Thornton will continue the discussion with an information session in Halifax on Wednesday at noon at the Innovacorp Enterprise Centre on Summer Street.) Deacon says the discussion is intensifying because the region’s startup community has proven it can generate wealth, exports and jobs, and policy makers are looking for ways to perpetuate that success. Click here to continue reading