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The Saskatoon Chamber has proposed the creation of a new investment tax credit that is specifically designed to help small business scale and help Saskatchewan compete and win against other jurisdictions.
Access to capital is critical for the development and expansion of Saskatchewan small businesses. Small businesses (1-49 employees) are the backbone of Saskatchewan’s economy, and primary job creators, with nearly 150,000 small businesses operating in the province accounting for more that 98% of businesses and representing nearly one-third of Saskatchewan’s GDP - small businesses are no small contributors. It is clear that our future depends on innovators, creators and independent owner-operators who are primed to grow and ready to scale up.
The proposed investment tax credit would operate on what we call the 50/50/50 approach to make the program competitive with other jurisdictions that have similar programs, as well as to make it easy to activate and promote. This approach would account for a 50% non-refundable Saskatchewan tax credit for individuals and corporations keeping the program attractive to investors. It would be geared towards eligible small businesses with less than 50 FTEs and of those employees a minimum of 50% must be residing in Saskatchewan to ensure that the program is kept local.
The landscape in Saskatchewan is such that current tax credit programs available are designed to attract major investments to the province and drive growth in particular sectors. Currently no tax credit program exists that is tailored specifically for small businesses across all industries.
The Labour Sponsored Venture Capital Corporation Fund allows Saskatchewan residents to invest in small and medium-sized Saskatchewan business by purchasing shares in the funds. These investments help Saskatchewan companies grow, and investors to earn a tax credit. However, access to capital for Saskatchewan’s smallest businesses outside these programs is limited, particularly those in our hospitality industries, which remains a significant barrier to growth.
With the introduction of an incentive tax credit, small businesses that have traditionally leveraged funds from friends and family would have greater access to outside investment while becoming a more attractive investment to these traditional sources of capital. As the business begins to scale up and grow they would become more attractive to existing venture capital programs like those administered by Golden Opportunities Fund.
We know that Saskatchewan’s small businesses are ready to deliver the jobs, productivity and innovation to contribute towards hitting the Government of Saskatchewan’s Growth Plan goals by 2030. The creation of this tax credit would aid in the creation of new jobs, drawing people to the province and growing our economic impact both locally and abroad.
The Chamber is eager to work with the provincial government to help make this tax credit a reality.