32.5% Tax Credit
Under Saskatchewan’s Labour-Sponsored Venture Capital Corporation (LSVCC) Act and the Income Tax Act (Canada), investments of up to $5,000 made between March 2nd, 2016 and February 29th, 2017 are eligible to receive a 17.5% Provincial tax credit and a 15% Federal tax credit.
|Your Investment||$ 5,000|
|Provincial Tax Credit (17.5%)||$875|
|Federal Tax Credit (15%)||$ 750|
|RRSP Tax Deferral* (38.75%)||$ 1,937.50|
|Net Cash Outlay After Tax Savings||$ 1,437.50|
* Assumes a $5,000 investment by an investor in a marginal tax bracket of 38.75% ($91,832 – $129,214).
SaskWorks contributions may be held in an RRSP, spousal RRSP, or LIRA account and are eligible to receive an RSP tax deferral equal to the shareholder’s marginal tax bracket.
Please note: registered contributions that have not reached maturity by a shareholder’s 71st birthday must be transferred to a RRIF account and will be subject to mandatory withdrawals. Please discuss the implications of a RRIF transfer with your investment advisor.
Alternatively, a shareholder may choose to hold their investment in a non-registered account.
8-Year Maturity Period
SaskWorks investments have an eight-year holding period attached to them. This is meant to encourage you to hold your investment long enough to allow the Fund to make smart investments that will increase your share value. However, you can redeem your investment at any time.
If you redeem all or part of your investment prior to the expiry of the eight-year holding period, the tax credits will be repayable to the Federal and Provincial Governments on those shares that have been held for less than eight years. The amount of tax credits issued will be withheld from the amount payable.
At the end of the eight-year holding period, you have three options:
- You can rollover and reinvest your mature shares back into SaskWorks to receive a second 32.5% tax credit on the amount reinvested
- You can redeem your investment without any amount being withheld
- You can leave your shares invested in the Fund
One of the greatest benefits of SaskWorks investors is the ability to rollover mature SaskWorks shares after the eight-year maturity period.
If you choose to rollover the matured shares in SaskWorks, you will receive a second 32.5% tax credit on the amount rolled, up to $5,000 without putting any new money in.
It is often the case that an investors out of pocket cost for their initial SaskWorks investment is close to $0 after taking advantage of the rollover opportunity.