Buying shares in a labour-sponsored venture capital corporation (LSVCC) can earn you a credit. The labour-sponsored funds tax credit is claimed across two lines: the net cost of the shares goes on line 41300, and the credit itself on line 41400.
The credit for an LSVCC that is registered only federally was eliminated for the 2017 and later tax years. What remains is the credit for a prescribed provincially registered corporation.
Who can claim it
You may be able to claim the credit if all of the following apply.
You were the first registered holder. You became the first registered holder to acquire, or to irrevocably subscribe to and pay for, an approved share of a prescribed LSVCC. You may buy approved shares directly, or acquire them through a registered retirement savings plan (RRSP), including a spousal or common-law partner RRSP. Where the first registered holder is a spousal or common-law partner RRSP, either the contributor or the annuitant may claim the credit — the credit cannot be split between them.
You acquired the share in the claim window. That is the tax year itself, or the first sixty days of the following year. If you bought within the first sixty days of the following year, include on line 41300 only the cost of the shares you are claiming on this year's return; you may choose to claim all or part of the cost on next year's return instead.
The share qualifies federally and provincially or territorially. If you bought shares after 2003 of an LSVCC that is registered provincially or territorially but not federally, you can claim the federal credit only if a provincial or territorial tax credit is also available for those shares.
Working out the net cost
Your net cost is the amount you paid for the shares, minus any government assistance you received for those shares — but federal, provincial, and territorial tax credits do not count as that kind of assistance. The net cost is what goes on line 41300.
Your province or territory may offer a similar credit, so fill out the tax and credit form for your province or territory of residence. If you were a resident of Quebec at the end of the year, the guide for the Quebec provincial return covers the provincial side.
What supports the claim
The CRA's page does not name a slip or a receipt for this credit, so there is no prescribed document to look for. What the claim needs you to be able to show is the amount you paid for the shares, the date you acquired them, and which LSVCC issued them.
In practice that is the confirmation or statement from the fund, or from the RRSP that holds the shares. Keep anything recording government assistance you received towards the purchase, since that reduces the net cost.
What to keep
Keep the purchase confirmation or statement showing the net cost, the acquisition date, and the issuing corporation. Where the shares sit inside an RRSP, keep the RRSP paperwork that shows who the contributor and the annuitant are — only one of them can claim.
Keep the documents in case the CRA asks to see them later. Where a purchase falls in the first sixty days of a year, keep it filed under both years, since part of the cost may be claimed on either return.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.