Enforcement
An investor who, before the expiry of the four-year holding period, redeems, cancels or disposes of an eligible share or receives a tax credit that he/she/it was not entitled to, shall repay the amount of the tax credit received, including interest. No recovery of the tax credit will be required in the event of the death of the shareholder.
The applicant corporation, community economic development corporation or association shall not redeem an eligible share unless the redemption occurs after four years from the date of issue or due to a transfer involving an RRSP of which the shareholder is the annuitant or because of the death of the shareholder.
If the applicant corporation, community economic development corporation or association redeems, acquires, cancels or transfers eligible shares within the four-year holding period, it is required to withhold, from the amount otherwise payable to the shareholder, the amount of the tax credit received. The withheld amount must be paid to the Minister of Finance within 30 days. No recovery of the tax credit will be required in the event of the death of the shareholder.
If, before the expiry of the four-year holding period, a corporation, community economic development corporation or association 's registration is revoked or surrendered, the corporation, community economic development corporation or association will immediately pay, to the Minister of Finance, all monies equal to all of the allowed tax credits issued within the preceding four years.
If, before the expiry of the four-year holding period, a corporation, community economic development corporation or association goes in receivership or in bankruptcy, the corporation, community economic development corporation or association will immediately pay, to the Minister of Finance, an amount equal to the percentage of the 48 months the investment was held. As required by the Minister of Finance, during the four-year holding period for specified share issuances, the applicant corporation, community economic development corporation or association shall file an annual return, a detailed status report of its shareholdings, financial statements (including those of associated corporations) for which an independent review engagement have been conducted or have been independently audited by a chartered professional accountant and other information required to confirm the use or disposition of the raised capital and to ensure compliance with other Small Business Investor Tax Credit Program requirements.
During the four-year holding period for the specified share issuances, the investors will provide the eligible corporation, community economic development corporation or association and the Department of Finance and Department of Justice and Attorney General any information, as may be required, to ensure compliance with the Small Business Investor Tax Credit Program.
For a community economic development corporation or association, if its investment requirements (40% in first 12 months after the closing date of the specified issue, 60 % after 24 months and 80% after 36 months with a maximum of 20% for administration) are not met a penalty of 1/6 of the amount of the shortfall will be imposed.