Saskatchewan Technology Startup Incentive (STSI)

 

The Saskatchewan Technology Startup Incentive (STSI)

A tax credit to encourage investment in early-stage technology startups.


 

Overview

STSI is designed to encourage investment in early-stage technology startups that bring new products to market and create jobs in Saskatchewan. 

The program offers a non-refundable 45% tax credit to Saskatchewan-based investors who invest in eligible technology startup businesses (ESBs). Tax credits are allocated on a first-come, first-served basis.

An investor can earn up to $225,000 in tax credits per annual investment in an ESB and claim a maximum of $140,000 per tax year. Tax credits can be carried forward for up to four years.

An ESB under the program can raise a maximum of $1 million in investment.

Startups and investors interested in applying to the program are required to do so through the Online Application PortalAll applicants are strongly advised to review the STSI Program Guide before submitting an application. 

 


 

Remaining Budget*

Tax credits will be issued on a first-come, first-served basis.

*Fiscal year ends March 31, 2021

The remaining budget for 2020-21 is: $1,478,591

*As of May 11, 2020. Subject to change.

 


 

Disclaimer 

Applicants applying to both STSI and the Saskatchewan Advantage Innovation Fund (SAIF) are limited to a lifetime cap of $450,000 combined between the two programs.

  • For more information, please refer to the Stacking Policy section in the Program Guide or contact the Program                             Administator.

 

 

Two administrative changes were recently made to the STSI Program. 

For an overview of these changes, please see here

 


 

Eligibility

Eligible Startup Businesses (ESBs)

In order to register as an ESB, a business must:

  • Have fewer than 50 employees, including full time, part-time, and contract workers. At least 50% of these employees                  must be based in Saskatchewan;
  • Have a permanent establishment in Saskatchewan;
  • Have not previously raised more than $5 million in equity capital; and,
  • Be a technology-based startup with a novel technology for sale or under development for sale as a new product or                     service. The technology can be from any industry.

Individual or Corporate Investors:

Both individuals and corporations may apply to become an eligible investor. In order to be eligible, they must:

  • Be based in Saskatchewan (paying taxes in Saskatchewan);
  • Be an accredited investor (i.e., an angel investor); or
  • Meet the exemption requirements outlined in the National Instrument 45-106, Prospectus Exemptions.

Please Note:

  • Founders are not eligible to invest in their own company. 

Limited Partnerships:

In order to be eligible, a limited partnership must:

  • Have a mechanism to track the ownership interests of each limited partner;
    • Must be able to determine each partner's proportionate share of an eligible investment;
  • File a declaration of limited partnership in accordance with the Business Names Registration Act;
  • Not be benefitting from another provincial tax incentive program;
  • Have limited partners who are:
    • Based in Saskatchewan (paying taxes in Saskatchewan);
    • An individual or corporation;
    • Accreditted investors or meet the exemption requirements outlined in the National Instrument 45-106, Prospectus                 Exemptions. 

Please Note:

  • The General Partner will apply to the program on behalf of its limited partners.
  • Tax credits will be issued to the limited partners based on their proportionate share of an eligible investment (This will be       determined by their ownership interests).
  • A Limited Partnership cannot claim more than 33 percent of the total amount of tax credits available in a given year. 

Venture Capital Corporations:

In order to be eligible, a VCC must:

  • Be based in Saskatchewan (paying taxes in Saskatchewan);
  • Have a mechanism to track each shareholder's contribution to an invested ESB;
  • Have equity capital of at least $25,000 at the time of registration; and
  • Have a share structure consisting of one or both of the following:
    • Common shares having no special rights or restrictions 
    • Common shares having special rights relating only to the redemption of shares by the corporation.

Please Note:

  • An existing VCC may have to establish a separate fund for the purposes of raising capital to invest in an ESB.
  • A VCC cannot claim more than 33 percent of the total amount of tax credits available in a given year. 
  • A VCC cannot apply to the program if it is benefitting from the Labour Sponsored Venture Capital Corporation tax                        incentive.

Additional information regarding eligibility can be found in the Program Guide.

 


 

How to Apply 

In order to apply:

     Step 1: Startups and investors (individuals, corporations, limited partnerships) must create an user account through                                         the Online Application Portal. Use the button below to sign up:

                                 Online Application Portal    

     Step 2: Once you have created an account, you will be directed to the STSI Forms Page. Select the application best suited for                        you from the left-hand side of the page.  

     Step 3:  Fill out and submit the application. If the application was successfully submitted, you will receive an email                                             confirmation. If you do not receive an email confirmation, please contact stsi@innovationsask.ca

  • All attachments submitted with an application must be under 5MB.  If an attachment is over 5MB, your information will              not be submitted and may be lost.

For an overview of the information that applicants will be required to submit, please refer to:

For more information on how to apply, please see the Program Guide.

 


 

After you Apply

  • Each application will be thoroughly evaluted to ensure it meets the eligibility criteria of the program. 
  • Processing times can range from 4 to 6 weeks for startup applications and 1 to 2 weeks for investor applications. 
  • The Program Administrator will work with the National Research Council of Canada's Industrial Research Assistance                    Program (NRC IRAP) to evaluate startup applications. 
  • Applicants who meet all of the the program requirements will receive a Notification/Certificate of Eligibility from the               Program Administrator.
  • Eligible startups can then seek investment from eligible investors.

See here for a list of approved Eligible Startup Businesses.

See here for a list of approved Accredited Investors (This list is not exhaustive. Only those investors who have given consent to have their names made public are included).

 


 

Apply for a Tax Credit Certificate

Once an eligible startup business (ESB) has finalized the terms of an investment with an eligible investor (i.e., through a subscription agreement, SAFE or convertible note), the following actions must occur: 

  • ESBs: An ESB must submit a Tax Credit Certificate Application on behalf of its investors. 
  • Limited Partnerships: A Limited Partnership must submit a Tax Credit Certificate Application on behalf of its partners. 
  • Venture Capital Corporations (VCC): The VCC must submit a Tax Credit Certificate Application on behalf of its                                 shareholders.

Use the button below to access the Tax Credit Certificate Application forms:

                                 Tax Credit Certificate Applications

Tax Credit Certificate Applications must be submitted by email to stsi@innovationsask.ca. 

If all the requirements are met, the ESB, Limited Partnership or VCC will receive a Tax Credit Certificate Application Approval Letter within 15 days. 

Please Note:

  • When an investment is made by a Limited Partnership/VCC, both the Limited Partnership/VCC and the eligible startup             business must submit a Tax Credit Certificate Application. The applications will be matched-up while being processed. 

 


 

Proof of Investment

Once an ESB has received a Tax Credit Certificate Application Approval Letter, it will have 40 days to submit proof that the investment has been received. 

If sufficient proof is not provided within 40 days, the Tax Credit Certificate Application will be denied and removed from the processing queue. The ESB will have to re-submit the application.

Proof of investment must come in the following two forms:

  1. A copy of the investor’s cheque or deposit slip; and,
  2. A bank statement showing the investment was deposited into the ESB’s account.

​Proof of investment documentation must be submitted to stsi@innovationsask.ca

Once the Program Administrator has received sufficient proof of investment, a Tax Credit Certificate Approval Letter will be issued to each investor.

Please Note:

  • Proof of investment documentation must come from a third party (i.e., The bank) in order to be approved.
  • Please see here for a complete overview of the proof of investment requirements (i.e,. cases where a wire transfer or                 escrow account is used). It is highly recommended that all applicants review these requirements before submitting their         documentation.
  • Failing to comply with these requirements will negatively impact/slow the approval process. 


 

Claiming the Tax Credit

Once you have received a tax credit certificate from Innovation Saskatchewan, follow these steps to claim your tax rebate.

 


 

Reporting Requirements

ESBs, Limited Partnerships and VCCs are required to file an Annual Return within six months of their fiscal year-end.

  • ESBs must submit an Annual Return in the two consecutive calendar years following their most recent investment (for               which tax credits were issued). 
  • Limited Partnerships and VCCs must submit an Annual Return each year. 

Use the button below to access the Annual Return Forms:

                                  Annual Return Forms

Annual Returns must be submitted by email to stsi@innovationsask.ca.

 


 

Additional Program Details

For any questions about the program, please contact the Program Administrator at stsi@innovationsask.ca

 

For Your Reference: