Cleantech start-ups in Saskatchewan are now included in a provincial incentive program that conveys up to $225,000 in non-refundable tax credits per annual investment to their investors. The newly released 2024-25 Saskatchewan budget doubles available annual funding for the Sustainable Technology Start-up Incentive, opens it up to new kinds of ventures and extends the program for an additional year, taking it to March 31, 2027.
Previously, Saskatchewan-based companies specializing in agricultural or digital technologies could qualify for the program, which provides tax relief on up to $2 million worth of their investors’ capital. Beginning in April, developers of clean technologies related to energy efficiency, reducing greenhouse gas (GHG) emissions or mitigating the environmental impacts of existing industrial processes will also be eligible.
Under program rules, participating companies must be headquartered in Saskatchewan, have fewer than 50 employees, including part-time and contract workers, and have previously raised no more than $5 million in equity capital. Investors must pay taxes in Saskatchewan and be an accredited investor.
Qualifying investors can attain a non-refundable tax credit for up to $225,000 per annual investment in an eligible start-up, which can be claimed over a seven-year period with a maximum claim of $140,000 in any single tax year. The Saskatchewan government provides the credits on a first-come, first-served basis to a maximum cap, which will be lifted to $7 million (up from $3.5 million) for the 2024 tax year.
The 2024 budget also extends a tax concession for small business that was introduced as a pandemic-related relief measure in 2020. The corporate tax rate was set to return to the pre-pandemic 2 per cent rate on the first $600,000 of eligible business earnings beginning on July 1 this year, but the schedule has now been revised to leave the rate at 1 per cent for an additional year, until June 30, 2025.
“From the time the small business rate was lowered in the fall of 2020, Saskatchewan’s small businesses will have saved an estimated $416 million in corporate income tax,” Saskatchewan’s Finance Minister, Donna Harpauer, stated in her budget speech. “The amount of eligible business income on which the small business tax rate applies will remain at $600,000 — the highest threshold in Canada. That means,Saskatchewan will continue to have the second-lowest small business tax rate in Canada.”
