NEWFOUNDLAND AND LABRADOR
REGULATION 57/18

Venture Capital Tax Credit Regulations (Amendment)
under the
Income Tax Act, 2000
(O.C. 2018-140)

(Filed July 19, 2018)

Under the authority of section 46.2 of the Income Tax Act, 2000, the Lieutenant-Governor in Council makes the following regulations.

Dated at St. John's, July 19, 2018.

Elizabeth Day
Deputy Clerk of the Executive Council

REGULATIONS

Analysis

        1.   S.2 Amdt.
Interpretation

        2.   S.19 Amdt.
Permitted investments and authorized expenses

        3.   S.27 Amdt.
Reporting requirements

        4.   Commencement

NLR 37/15

        1. Subsection 2(1) of the Venture Capital Tax Credit Regulations is amended by adding immediately after paragraph (b) the following:

         (b.1)  "aggregate capital commitment" means the sum of the amount of cash committed to be contributed by all limited partners to the capital of the limited partnership;

 

        2. Subsection 19(5) of the regulations is repealed and the following substituted:

             (5)  A qualifying venture capital fund may incur annual expenses of no more than 20% of its aggregate capital commitment, other than expenses paid out of retained earnings, if

             (a)  the expenses are reasonable and are incurred for

                      (i)  share issuance,

                     (ii)  office occupancy,

                    (iii)  legal fees,

                    (iv)  preparation of financial accounts by an external accountant,

                     (v)  preparation of the annual return under section 27, or

                    (vi)  a management fee of no more than 2.5% per annum of the aggregate capital commitment; and

             (b)  any expenses paid to a person who controls directly or indirectly the qualifying venture capital fund or who belongs to a group that controls directly or indirectly the qualifying venture capital fund

                      (i)  were specifically approved by

                            (A)  special resolution in advance of payment where the qualifying venture capital fund is a corporation, or

                            (B)  two-thirds of the limited partnership unit holders in advance of payment where the qualifying venture capital fund is a limited partnership, and

                     (ii)  are made to a person whose business it is to provide the services or things in respect of which the expenses were incurred.

 

        3. Paragraph 27(a) of the regulations is repealed and the following substituted:

             (a)  the amount of the aggregate capital commitment and the amount of the equity capital raised by the qualifying venture capital fund;

Commencement

        4. These regulations are considered to have come into force on January 1, 2014.

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