An early Christmas gift for the LSIF industry

The news is out that the Ontario government is extending the sunset period for the Labour-sponsored fund industry by a year to 2012. This is a good suprise, but what was more startling was their decision to increase the amount investors can get a tax credit for. The maximum contribution limit has been increased to $7,500 annually, up from a previous $5,000.

A bit confusing, even it it’s welcomed by the cash-starved venture capital industry. If the LSIF industry is truly destined for the dustbin, why did the government increase the amount that investors can earn a tax credit for?

We’ve been mucking around this topic for some time (see “Brutal venture capital stats for H1 2007“, August 1-07), and are delighted that some authoritative groups are doing what they can to spread the word regarding the reality of this crisis (“Deloitte’s study on Canadian VC Crisis is well-timed“, December 6-07).

This may well be a sign that Ontario Finance Minister Dwight Duncan is open to revisiting the entire topic. Later this week we’ll summarize a few useful and tangible things that governments can do to help stimulate the VC business.

MRM