New Brunswick Small Business Investor Tax Credit enhancements: Do you qualify?

This provincial non-refundable income tax credit reduces the amount of provincial income tax otherwise payable by eligible individual, corporate, and trust investors investing in eligible small businesses in New Brunswick. The changes would apply retroactively to investments made on or after March 17, 2026.

What are the changes? 

The province introduces several key enhancements to the tax credit: 

• The non-refundable tax credit rate for corporate and trust investors increases to 25% (from 15%) on investments of up to $500,000. The 50% non-refundable tax credit on investments of up to $250,000 for individual investors remains unchanged.
• A new two-tiered system would offer a higher investment limit of up to $1 million for businesses operating in strategic sectors such as agriculture, forestry, aquaculture, manufacturing, architecture and engineering, digital media, performing arts, and information technology. The investment limits for non-strategic sectors will remain unchanged at $250,000 for individuals and $500,000 for corporate and trust investors.
• The maximum net tangible asset threshold for eligible companies receiving the investment (applicant corporation) increases to $50 million (from $40 million), allowing more businesses to qualify.
• Convertible debentures would be recognized as eligible investment vehicles, providing more flexibility in structuring investments. 

Under the previous rules, corporate and trust investors receive a 15% non-refundable tax credit on investments of up to $500,000 made after January 1, 2014, while individual investors receive a 50% non-refundable tax credit on investments of up to $250,000 for investments made after April 1, 2015. 

As a small business owner, is my corporation eligible to participate in this program? 

To participate in this program to raise capital, a corporation must: 

• Be a private corporation that’s either incorporated in NB or incorporated elsewhere and registered to carry on business in NB.
• Use all or substantially all (at least 90%) of its assets and income to generate active business income in NB.
• Have net tangible assets of $50 million or less for the associated group of corporations.
• In each of the four years following the date of registration under the NB SBITC Act:
  • Pay at least 75% of its wages and salaries to individuals who are residents of NB, or
  • If the applicant corporation exports more than 50% of its goods and services outside of NB, pay at least 50% of its wages and salaries to individuals who are residents of NB 
• Be subject to other requirements listed on the government’s website. 

Eligible applicants must raise a minimum of $10,000 in capital and have at least three investors, with these details submitted as part of their investment plan when registering for the program. In addition, the funds raised can’t be used for prohibited purposes, including lending activities, purchasing shares of another person, investment outside of the province, investment in land, redemption of shares, payment of dividends, etc. 

As an investor, is my investment eligible for the tax credit? 

To be eligible to claim the tax credit, individual investors must be at least 19 years old and residents of NB, while corporate and trust investors must have a permanent establishment in NB. The minimum total investment is $1,000 for individual investors and $50,000 for corporate and trust investors. Investments can’t be financed using government assistance. 

Eligible investments (shares or convertible debentures of the applicant corporation) must be held for a minimum of four years. If an investor redeems, cancels, or otherwise disposes of the investment before the end of this holding period, or receives a tax credit to which they weren’t entitled, they are required to repay the credit, including any applicable interest. Furthermore, the shares issued can’t be replacement shares (i.e., shares acquired after disposing of other shares of the same corporation between December 10, 2002 and the investment date) and must not be issued primarily for the purpose of claiming the tax credit, among other requirements. 

How can a corporation apply for the program? 

To apply for the NB SBITC, a corporation must complete a two-step process: 

Apply for a certificate of registration: A corporation must submit a prescribed application form (along with an investment plan and other required documents) to the NB Department of Finance. The investment plan should outline the intended use of capital, along with other required information. The certificate of registration will indicate the maximum amount of capital that can be issued before a specified date. The corporation then has 90 days from the approval date to complete the share issuance to investors as outlined in the plan. 
 
Apply for a tax credit certificate: A corporation must then apply for a tax credit certificate for each eligible investor within 30 days of issuing the shares or convertible debentures by submitting a prescribed form to the NB Department of Finance along with required information on each investor.  

How can investors claim the tax credit on their tax returns? 

Investors must attach these certificates to their personal or corporate income tax returns for the applicable year to claim the tax credit. Unused credits may be carried forward for up to seven years or carried back for up to three years for these investors. Individual investors who make an investment within the first 60 days of a calendar year may claim the tax credit on their tax return for the prior tax year.

What are the compliance requirements for the four-year holding period? 

Investors must hold the shares of the applicant corporation for a minimum of four years or may be asked to repay the tax credit plus applicable interest. During the four-year holding period, corporations must file annual returns to demonstrate that they comply with the eligibility requirements. These returns must include: 

• A detailed report on shareholdings
• Financial statements (including those of associated corporations) that have been reviewed or audited
• Additional information confirming how the raised capital has been used or disposed of 

Throughout this period, investors are also required to provide any necessary information to the applicant corporation, the Department of Finance, and the Department of Justice and Attorney General to ensure ongoing compliance.

Takeaway 

The enhanced SBITC program expands eligibility for NB businesses, particularly for businesses in strategic sectors, and increases benefits for eligible investors in the province. We can assist in assessing eligibility and structuring investments efficiently under the updated rules, whether you are raising capital or making an investment.  

Contact your local advisor or reach out to us here if you would like to learn more about this tax credit. 

 
Disclaimer 
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.