CPABC in Focus March/April 2018 | Page 36

BC Tax Incentives for the Technology and Entertainment Sectors
By Jessica Yuen , CPA , CA
Jessica Yuen is a manager in tax services at PwC Vancouver , where she specializes in Canadian corporate tax with a particular focus on the technology and life sciences sectors . She would like to thank Melanie Campbell , CPA , CA , a senior tax manager at PwC , and Ian Heine , CPA , CA , a tax partner at PwC , for their advice and guidance on this article .

The technology industry has steadily grown and matured over the last decade to become a key sector in the British Columbia economy . According to the Profile of the British Columbia Technology Sector : 2017 Edition released by BC Stats , the high-tech sector now employs more people than the mining , oil and gas , and forestry sectors combined . Moreover , in 2016 , it accounted for 7 % of the province ’ s GDP . 1 The success of BC ’ s tech industry is also being recognized globally . Bloomberg Businessweek called Vancouver “ the new tech hub ,” 2 and the city ranked as the top startup ecosystem in Canada and fifteenth best in the world in the 2017 edition of the Global Startup Ecosystem Report . 3 Film and television production is also thriving . Take , for example , Creative BC ’ s 4 projection for BC film and television production expenditures in 2016-2017 : at $ 2.6 billion , this marked an increase of 35 % from the previous year and was the highest amount ever projected . Tax incentives designed to attract new and innovative companies to BC , along with skilled workers , have bolstered both sectors . These tax incentives continue to evolve to meet the needs of industry and the provincial government . To date , tax incentives are available to support investments into small businesses , research and development , and specific sectors such as digital media , animation , and film and television production . This article reviews just some of the credits available to eligible corporations and individuals in the technology and entertainment sectors .

Small business venture capital tax credit The small business venture capital tax credit was established to encourage investors to make early-stage venture capital investments in BC small businesses to help them develop , grow , and mature . To qualify for the tax credit , investments must be made in either a registered venture capital corporation ( VCC ) or an eligible business corporation ( EBC ). A VCC “ is formed for the sole purpose of investing in start-ups and emerging and expanding eligible small businesses .” 5 Under the direct investment model , an EBC can accept equity capital directly from investors . To qualify as an EBC , a corporation must meet several criteria in relation to its business activity , employment levels , and presence in BC . The small business venture capital tax credit can be applied against provincial income taxes payable and can be carried forward up to four years . Individual investors are entitled to a 30 % refundable tax credit , up to an annual maximum of $ 60,000 . Corporate investors are entitled to a 30 % non-refundable tax credit , with no annual limit . Tax credit budgets are limited and are available on a first-come , first-serve basis . Starting in 2017 , the budget for the small business venture capital tax credit increased from $ 35 million to $ 38.5 million , allowing for an increase of $ 11.7 million in additional equity capital for qualifying businesses each year .
BC scientific research & experimental development ( BC SR & ED ) tax credit The BC SR & ED tax credit , which mirrors the federal tax incentive , is intended to encourage corporations to perform research and development ( R & D ) that will lead to new or improved scientific or technological advancements . The fall 2017 provincial budget update extended the BC SR & ED program to September 1 , 2022 .
1
BC Stats , Profile of the British Columbia Technology Sector : 2017 Edition , November 2017 .
2
Karen Weise , “ Vancouver , the New Tech Hub ,” Bloomberg Businessweek , May 27 , 2014 .
3
Startup Genome , The 2017 Global Startup Ecosystem Report , December 2017 . Version 1.8 . ( startupgenome . com ).
4
Creative BC is an independent not-for-profit organization that collaborates with industry and government to support BC ’ s film , television , music , interactive digital media , and book and magazine publishing industries ( creativebc . com ).
5 www2 . gov . bc . ca / gov / content / employment-business / investment-capital / venture-capital-programs / venture-capitalcorporation
Teerapol24 / iStock / Thinkstock
36 CPABC in Focus • March / April 2018