The Canadian Government is consulting on a package of draft legislative proposals for the orderly phase-out of the federal Labor-Sponsored Venture Capital Corporations tax credit.
Introduced in the 1980s, LSVCCs are a type of mutual fund corporation, sponsored by labor unions or other labor organizations, that make venture capital investments in small and medium-sized businesses. Individuals acquiring LSVCC shares of up to CAD5,000 (USD4,273) a year can receive a 15 percent federal tax credit. Federally registered LSVCCs are subject to the rules set out in the Income Tax Act, while provincially registered funds are subject to the province's own legislation and are prescribed for the purposes of the Income Tax Act. This prescription allows individuals investing in provincially registered LSVCCs to claim the federal tax credit.
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