Thank you Mr. Chairman, I am. I am pleased to present today two bills that will improve access by small and medium sized northern businesses to equity capital. These are: Bill 3, Risk Capital Investment Tax Credit Act, and Bill 4, An Act to Amend the Income Tax Act. In 1996, the Investment Sub-committee of the Standing Committee on Government Operations recommended that the government consider investment tax credits as a means of encouraging investment in the north. In my 1997 Budget Address, I responded that the government would examine options for encouraging investment through the tax system, and in my budget this past January, I announced that the government intended to introduce a Northwest Territories Tax Credit Program. This program would encourage the private sector to market shares of the Northwest Territories businesses to northern taxpayers and encourage northern investors to purchase shares in northern businesses.
The bill allows a taxpayer to qualify for tax credits by purchasing shares in any one of the three venture capital corporations; labour sponsored venture capital corporations, employee venture capital corporations and community endorsed venture capital corporation. The bill requires the venture capital corporations, in turn, to invest the funds received from investors in the shares or subordinated debt of eligible businesses. A labour sponsored venture capital corporation must invest 70 percent of its funds in eligible businesses.
An employee venture capital corporation must invest 70 percent of its funds in the eligible business that employs the investors. A community endorsed venture capital corporation must invest 70 percent of its funds in eligible businesses that have been endorsed by the communities in which the employees of the eligible businesses live. The bill also allows taxpayers to qualify for tax credits by investing directly in the shares or subordinated debt of certain eligible businesses, referred to as territorial business corporations.
Bill 4, An Act to Amend the Income Tax Act, permits taxpayers, either individuals or corporations, to deduct from Northwest Territories income tax otherwise payable, an amount equal to the tax credits issued under the Risk Capital Investment Tax Credits Act, up to an annual maximum amount of $30,000 less any tax credits that may be deducted under the federal Income Tax Act. This bill just compliments the previous one.
The bill also permits unused tax credits issued under the Risk Capital Investment Tax Credit Act to be carried back three years and forward seven years and deducted from tax otherwise payable in any of those years. Because of a recently announced change to the federal Labour Sponsored Venture Capital Tax Credit, I will be introducing an amendment at the appropriate time to the Risk Capital Investment Tax Credit Act, to ensure that the Northwest Territories credit remains harmonized with the federal one. Thank you, Mr. Chairman.