How to Use the Small Business Investor Tax Credit in New Brunswick

How to Use the Small Business Investor Tax Credit in New Brunswick

Raising private capital is challenging for early-stage and growing businesses in New Brunswick. The Small Business Investor Tax Credit (SBITC) supports companies by offering investors a provincial tax break when they invest in eligible local businesses. If your business needs equity financing, this program can help you attract investors.

---

How the Small Business Investor Tax Credit Works

The Small Business Investor Tax Credit Program is managed by the Government of New Brunswick through the Department of Finance and Treasury Board. It provides a non-refundable provincial income tax credit to investors who buy eligible shares in approved New Brunswick small businesses.

Credit Amounts and Limits

The credit value depends on the type of investor:

• Individual investors

  • 50% tax credit
  • On investments up to $250,000 per year
  • Maximum annual credit: $125,000

• Corporations and trusts

  • 15% tax credit
  • On investments up to $500,000 per year
  • Maximum annual credit: $75,000

These credits reduce New Brunswick provincial income tax payable. They are not refundable, so investors must have provincial tax owing to benefit.

Who the Program Is For

This program involves three parties: the business, the investor, and the province.

Eligible businesses

• Must be a New Brunswick small business
• Must meet eligibility rules set by the program, including business structure and operations
• Must submit an investment plan explaining how the funds will be used
• Community Economic Development Corporations (CEDCs) and associations can also qualify if approved to sell shares in New Brunswick

Eligible investors

• Individuals who pay New Brunswick personal income tax
• Corporations or trusts subject to New Brunswick corporate income tax

Eligible investments

• Purchase of newly issued shares
• Shares must be approved under the program
• Funds must be used for approved business purposes outlined in the investment plan

---

Eligibility Requirements

To participate in the Small Business Investor Tax Credit, both your business and your investors must meet specific criteria.

Business Eligibility

• Your business must be based in New Brunswick and meet the province’s definition of a small business.
• You must have a valid business number and be in good standing with provincial filings and taxes.
• An investment plan is required, showing how the funds will support growth, job creation, or other approved uses within New Brunswick.
• Community Economic Development Corporations (CEDCs) and associations can also apply if they are authorized to sell shares in the province.

Investor Eligibility

• Individuals must pay New Brunswick personal income tax.
• Corporations and trusts must pay New Brunswick corporate income tax.
• Investors must purchase newly issued, approved shares directly from the business.

Investment Eligibility

• Only newly issued shares approved under the program qualify.
• Investments made before provincial approval do not count.
• Funds raised must be used for the purposes described in the investment plan.

---

Step-by-Step: How Your Business Uses the Small Business Investor Tax Credit

The tax credit is claimed by investors, but your business must be approved first.

1. Apply as an Eligible Business

Your business applies to the province to participate in the program. This includes:

• Confirming you meet the definition of a New Brunswick small business
• Submitting a detailed investment plan
• Outlining how the capital will support growth, jobs, or operations in New Brunswick

Approval is required before shares are issued.

2. Get Approval to Issue Eligible Shares

Once approved, your business is authorized to issue shares that qualify for the tax credit. Only these approved shares count.

3. Raise Capital from Investors

You can now raise equity capital and let investors know about the tax credit. Many see the 50% credit for individuals as a strong risk-reduction tool.

Tools like GrantHub’s eligibility matcher can help you filter complementary funding programs by province and business type in seconds.

4. Investors Claim the Credit

Investors claim the Small Business Investor Tax Credit when they file their New Brunswick provincial tax return. Your business must provide the required documentation confirming the eligible investment.

---

Common Mistakes to Avoid

1. Issuing shares before approval
   Investments made before provincial approval do not qualify for the tax credit.

2. Assuming the business gets the tax credit
   The credit goes to the investor. Your benefit is improved access to private capital.

3. Using funds outside the approved investment plan
   Capital must be used as described. Misuse can jeopardize approval or future participation.

4. Ignoring investor tax limits
   Investors may not be able to use the full credit if they do not owe enough New Brunswick tax.

---

Frequently Asked Questions

Q: What is the Small Business Investor Tax Credit in New Brunswick?
It is a provincial tax credit that rewards individuals and corporations for investing in eligible New Brunswick small businesses through approved share purchases.

Q: How much is the investor tax credit worth?
Individuals can receive a 50% credit on up to $250,000 invested per year. Corporations and trusts can receive a 15% credit on up to $500,000 invested per year.

Q: Do small businesses or investors apply for the tax credit?
Businesses apply to be approved under the program. Investors claim the tax credit on their New Brunswick tax return after making an eligible investment.

Q: Is the Small Business Investor Tax Credit refundable?
No. It is a non-refundable credit that can only reduce New Brunswick provincial income tax owing.

Q: Can this tax credit be combined with other grants or incentives?
In many cases, yes. Stacking rules depend on the specific program. GrantHub tracks active grant programs across Canada—check which ones match your business profile.

---

See Also

• Small Business and Regional Development Grants: Eligible Expenses
• Nova Scotia Small Business Tax Deduction: Eligibility Explained
• How to Use Farm Skills Development Grants to Improve Farm Management in New Brunswick

---

Next Steps

If you plan to raise equity in New Brunswick, the Small Business Investor Tax Credit can help attract private investors. The key is getting approved early and making sure your investment plan follows program rules. GrantHub helps you see how this tax credit fits with other funding options available to your business.