January 18th, 2020

Startup companies face losing tax credits

By Mabell, Dave on August 13, 2019.

Dave Mabell

Lethbridge Herald


While Calgary oil companies are getting a tax break, some entrepreneurs in Lethbridge are facing an uncertain future.

Alberta’s United Conservative government has suspended three programs aimed at helping local startup companies find the capital they need. One of the initiatives, an investor tax credit, is reported to have leveraged investments totalling $94 million in small and mid-sized Alberta businesses, at a cost of $28.1 million in credits.

And Lethbridge entrepreneurs have been part of that success story, says Economic Development Lethbridge executive director Trevor Lewington.

“We have had a number of local entrepreneurs make use of the voucher program with Alberta Innovates,” he reports.

The new economic development minister has actually put a freeze on three programs for startups, he points out. They’re now “under review.”

A number of Lethbridge-area businesses have been launched, he says, with the help of the Alberta Investor Tax Credit, the Capital Investment Tax Credit and the Interactive Digital Media Tax Credit.

“All three programs are currently suspended and not accepting new applications,” he confirms.

But citing their impact, Lewington says he hopes they’ll be eventually reinstated.

The incentives were offered to “technology entrepreneurs who will be helping to diversify the economy away from traditional sectors,” he says.

“So naturally we are concerned if after the review period, that the voucher program is not renewed.”

Modelled after similar initiatives in British Columbia and Manitoba, the incentives were introduced by the previous New Democratic government.

A spokesperson for Tanya Fir, the economic development minister, says the small business incentives – like many other NDP initiatives – may be cancelled.

“We are reviewing these programs to ensure that they are an effective and responsible use of taxpayers’ dollars,” press secretary Justin Brattinga stated.

The Jason Kenney government, he said, has already taken steps to make Alberta more competitive by cutting the big-business corporate tax rate. But startup companies don’t have profits to tax, proponents of the now-at-risk programs point out.

While they were available, Lewington says the initiatives helped “level the playing field with other jurisdictions in North America, against whom we competed for attracting capital.

“So the potential cancellation of these programs is pause for concern without other measures to ensure competitiveness in Alberta.”

“That said,” he adds, “I can understand a new government’s need and desire to review the results and determine if the outcomes reported are delivering the required return on investment.”

There are other sources of funding, Lewington says.

“There are many programs available through organizations like Community Futures as well as BDC (the Business Development Bank of Canada) that could provide financial assistance.

“Angel investors and crowd sourcing of funds are increasingly popular tools as well.”

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2 Responses to “Startup companies face losing tax credits”

  1. Jagtech says:

    Don’t expect too many gifts from the Provincial government for Lethbridge; a direct result of electing an NDP member. Figure it out, folks!

  2. George McCrea says:

    Well one anyway by 255 or so votes. We can also thank the NDP for funding one pillar of the SCS without consideration
    to the other three pillars. Why we would want any new government to come in and not review policy and spending. All do good or bad. Must be reconciled