Nova Scotia has quintupled the size of its equity tax credits for people investing in young, innovative companies, and signaled that more changes are on the way.

The provincial government announced Friday that its new Innovation Equity Tax Credit will apply to investments in approved companies of up to $250,000, up from $50,000. Investors will receive a credit equal to 35 percent of their qualifying investment, or 45 percent in the priority sectors of oceans technology and life sciences.

The announcement comes amid a movement across Atlantic Canada to improve and harmonize the investment tax credits that attract private investment to innovative companies. Last summer, James Curry of the Atlantic Canadian Opportunities Agency led a group that produced a research paper on the matter, and Senator Colin Deacon has called for increased credits at both the provincial and federal levels.

“This new tax credit encourages Nova Scotians to invest in our home-grown entrepreneurs and local companies so they can drive growth, be more competitive and succeed,” said Finance Minister Karen Casey in the statement. “It will add to our ongoing efforts to improve the business climate in Nova Scotia for innovation-driven entrepreneurship by doing things differently to support economic growth.”

Momentum Growing for Regional Investment Tax Credit

The statement on the new policy said the new tax credits are effective immediately and the government will narrow the range of businesses that are eligible for the tax credit.

Most provinces in Canada and states in the U.S. offer these investment tax credits to encourage private investment in startups. With the new levels, Nova Scotia’s investment tax credit is more in line with those of New Brunswick and Newfoundland and Labrador.

According to the online information on provincial or territorial tax credits, these are the investment tax credits available across the country:

The big question remaining is what the coming announcements will entail.

“The province is also exploring options to expand the tax credit through legislation this spring,” said the statement. “Those options include making corporations and qualified venture capital funds eligible for the credit.”

There has been an effort through the Atlantic Growth Strategy, an economic initiative involving the federal and provincial governments in the region, to harmonize regional equity tax credits. Some people are pushing for taxpayers in one province to be eligible for credits if they invest in companies based in another province, or even to allow investors from outside the region to benefit from the tax credit by investing in Atlantic Canadian companies.

“This is a great first step,” Keith MacIntyre, a tax partner at Grant Thornton in Halifax, said in an email Friday. “What they are promising for the spring is what’s most encouraging.  They are open to modernizing the credit to reflect today’s market. This will give tech companies the greatest chance to get the funding they need.”