Tax Credit FAQs
What is the 30% tax credit?
Investors in Pender Growth Fund are eligible to receive, from the BC government, a cash-back tax credit equal to 30% of the amount they invest up to a maximum of $200,000 per year.
The investment tax credit will be applied to your income taxes payable, and if the credit is more than taxes payable you will receive a cheque for the remaining credit.
The tax credit effectively reduces the cost of your investment by 30%. If you invest $10,000 in Pender Growth Fund, you will receive a $3,000 tax credit making the actual after tax cost of your investment only $7,000.
How does the tax credit work?
An individual investor who buys up to $200,000 of shares in Pender Growth Fund each year will receive a fully refundable BC Tax Credit equal to 30% of the sum they invested, up to a maximum of $60,000. If an individual has unused tax credits greater than $60,000, the excess can be used in any of the next four tax years — up to an annual limit of $60,000.
The 30% tax credit is available to BC residents who purchase original shares in the Pender Growth Fund. It is a straight 30% provincial tax credit determined by the amount invested. It's not a loan - you do not need to pay the money back. It's not taxable — it does not affect your marginal tax rate. For example, an investor who purchases $10,000 will receive a tax credit receipt from the BC government of $3,000. No matter what your income, you are eligible for the full 30% credit on investment.
The deadline for subscriptions to receive the tax credit is 60 days past the end of the prior calendar year; however, the tax credits can sell out before that time. The BC government will then send you a tax credit notification that is to be included in your individual tax return.
What is the difference between refundable and non-refundable tax credits?
When you buy shares in the Pender Growth Fund you receive a fully refundable, cash-back tax credit of 30% of the sum invested, or up to $60,000. Non-refundable credits from Labour Sponsored Funds can only be used to reduce taxes owing and are limited to maximums of $750 and $2,000 for federal and BC credits respectively.
How do individuals use the 30% tax credit?
The 30% cash-back tax credit offers tax planning opportunities to individuals. You can increase tax savings; withdraw cash from your LIRA or RRSP; maximize your RRSP contributions; use it as an alternative to oil and gas or resource flow-throughs or reduce or eliminate taxes payable.
Click here for further details on these and more tax planning strategies.
How can corporations use the tax credit?
A corporate investor can buy shares of the Fund and use the tax credit to reduce any BC income tax payable. A corporation is not limited to a maximum deduction of $60,000, but it will not receive a refund if its tax credit exceeds the amount of tax it would otherwise have to pay in a taxation year. Unused tax credits can be carried forward for up to four tax years.
Does the 30% tax credit affect alternative minimum tax (AMT)?
No. The 30% tax credit does not affect the calculation of AMT.
I've already bought LSF shares this year, can I still buy Pender shares?
Yes, you can still purchase up to $200,000 of shares of Pender Growth Fund and receive up to $60,000 in additional tax credits each year. Even though you may be receiving non-refundable credits from an LSF, this does not restrict your ability to buy Pender Growth Fund shares and take full advantage of refundable tax credits.
Are there maximum tax credits in a lifetime?
No. There is no lifetime limit.