VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/22/13 -- GrowthWorks announced today its disappointment and concern with the Federal Government's decision to phase out the 15% federal Labour-Sponsored Venture Capital Corporation ("LSVCC") tax credit. The federal tax credit will be reduced to 10% in 2015 and 5% in 2016 before being eliminated in 2017.
The announced changes to the federal LSVCC tax credit do not affect provincial LSVCC tax credits. Through its Venture Capital Division, GrowthWorks Capital Ltd. and other operating subsidiaries manage GrowthWorks Canadian Fund Ltd., GrowthWorks Commercialization Fund Ltd., GrowthWorks Atlantic Venture Fund Ltd. and Working Opportunity Fund (EVCC) Ltd. While fundraising for GrowthWorks managed LSVCCs has declined to modest levels over the past several years, management anticipates that the phase out of the federal LSVCC tax credit will affect these funds' ability to raise capital. GrowthWorks is assessing the impact of this announcement on its managed funds that continue to offer Class A Shares.
"We are surprised with this decision because the program has been very successful and critical to venture capital supply in many parts of the country. The government would have better understood this if they had consulted the industry prior to making this decision," said David Levi, President and CEO of GrowthWorks. "This decision is also inconsistent with Provinces such as BC, Quebec and Saskatchewan with strong demand for these types of product, and the investments and jobs that go with it."
"What is equally confusing is the inconsistent message, where on one hand the Federal Government will allow tax credits for junior exploration companies, through Flow-Through Shares, but on the other will now phase out the tax credits for technology, bio tech, and various other companies creating innovation. Remember that Blackberry once received funding from an LSVCC back in its start-up phase," says Levi.
"Although we don't agree with the decision, we welcome the opportunity to work with the Federal Government to review the facts of the situation and establish the continued importance of this program throughout the country," said Levi. "In the meantime, we will continue with business as usual while we work towards extending the federal timeline, as well as working with the various provinces where the product and tax features are already popular."
LSIF's have been a strategic investment option for Canadian investors since the early 1980's, and the industry has raised billions of dollars all invested in various early stage companies and employing thousands of Canadians.
About GrowthWorks(i) (www.growthworks.ca) - GrowthWorks managed funds provide investment capital for Canadian companies and tax-advantaged investment opportunities for Canadian investors. through the Working Opportunity Fund (EVCC) Ltd., GrowthWorks Atlantic Venture Fund Ltd., GrowthWorks Commercialization Fund Ltd. and GrowthWorks Canadian Fund Ltd. GrowthWorks identifies, analyzes and structures investments in companies with high growth potential. Particular emphasis is placed on IT, Life Sciences and Cleantech sectors. Building on more than 20 years of investment expertise, GrowthWorks is a leader in Canadian venture capital management. GrowthWorks is a registered trademark of GrowthWorks Capital Ltd.
(i) GrowthWorks refers to GrowthWorks Ltd. and: GrowthWorks Capital Ltd., manager of the Working Opportunity Fund (EVCC) Ltd.; GrowthWorks WV Management Ltd., manager of GrowthWorks Canadian Fund Ltd. and GrowthWorks Commercialization Fund Ltd.; and GrowthWorks Atlantic Ltd., manager of GrowthWorks Atlantic Venture Fund Ltd.
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