Information provided by Mentor Works
When Canada’s federal budget was released on March 19, 2019, it gave Canadians insight into the Liberal party’s spending strategies. Like previous years, the federal government is staying committed to investment aimed at boosting the economy, especially as it relates to middle-class families. However, Budget 2019 also provided a view of the federal government’s commitment to supporting specific Canadian business objectives.
There are several indicators in Budget 2019 that point towards new and continued government funding programs meant to boost investment and support competitiveness.
Although federal budgets rarely provide clear insight into specific grants and incentives that businesses can apply for, certain budget allotments imply the creation or continuation of funding programs. Budget 2019 made clear commitments to hiring and training programs, research and innovation funding, and some capital investment tax measures. Ultimately, the investments promised in Budget 2019 will lay the foundation for new Canadian government funding programs over the coming year.
Having tabled its latest federal budget, the Liberal Party of Canada remains committed in its strategy to outpace federal debt with economic growth. So far, the strategy has been working, with Canada leading all G7 member countries in its debt-to-GDP ratio. While some are concerned that there is no plan in place to provide a balanced budget, others are welcoming the investment into several key areas of the economy that need a boost.
Politics aside, there are many key investment measures provided through Budget 2019 that all Canadians should be excited for. Some of the most notable changes that will impact the Canadian government funding landscape include:
Investing in skills training, work opportunities for youth, and filling talent gaps through international recruitment are three ways employers will benefit from Budget 2019. Multi-year commitments will support the workforce and in turn improve business conditions across Canada.
Funding to Hire Co-op Students
Budget 2019 proposes $631.2 million of investment over five years, starting in 2019–20, to support up to 20,000 new post-secondary work placements per year. In addition, it’s budgeted $150 million over four years, starting in 2020–21, to support Employment and Social Development Canada, a main source of co-op and internship funding for employers. This will ensure that these types of programs remain available or expand to support even more employers in the coming years.
Funding for Employee Skills
The Canada Training Benefit invests more than $1.7 billion over five years, and $586.5 million per year ongoing, to support skills development for Canadian workers aged 25-64. Together with the new EI Training Support Benefit, Canadians will automatically accumulate $250 per year to a lifetime limit of $5,000 that can be used to offset the costs of training through colleges, universities, and other eligible facilities.
It’s unclear whether this is a new strategy meant to replace the Canada Job Grant, a training grant for employers who can apply for funding to offset the costs of third-party training programs. The Canada Job Grant was introduced in 2014 as a six-year initiative and will wind down in 2019-2020. New employer-based incentives could be announced closer to the end of the Canada Job Grant, but nothing has been formalized at this time.
Funding for Recruiting International Talent
The new Global Talent Stream will receive $35.2 million over five years, beginning in 2019–20, with $7.4 million per year ongoing to help businesses expedite international workers who can fill talent gaps. To participate, employers must be referred by provincial or municipal governments, or regional development agencies (RDAs). Companies are also eligible if they’re seeking highly-skilled workers for industries where talent gaps are common, including in science, engineering, technology, or mathematics (STEM) or information technology (IT) professions.
Announcements made through Budget 2019 will also directly impact two of Canada’s leading research and development funding programs, the Strategic Innovation Fund (SIF) and the Scientific Research and Experimental Development (SR&ED) tax credit. Tax implications for purchasing green vehicles also provides relief for many firms across the country.
Funding for Innovative Investment
The Strategic Innovation Fund (SIF) is a Canadian government funding program that awards a combination of repayable and non-repayable contributions to larger businesses that invest in highly innovative products and processes. Budget 2019 announces another $100 million in funding for SIF, which is to be invested in activities that support the Clean Resource Innovation Network, a consortium made up of businesses, innovators, not-for-profits, and academic institutions. The Innovation Network will leverage SIF funding to continue engaging in collaborative projects that lessen impacts from Canada’s oil and gas industries.
Funding for Small Businesses Focused on Innovation
The Scientific Research and Experimental Development (SR&ED) tax credit provides a basic 15% non-refundable contribution to all businesses performing domestic experimental research and development projects. Previously, small and medium-sized businesses could have this rate increased to 35% for their first $3 million of expenses claimed per year based on certain thresholds on taxable capital and income. The income threshold to qualify for SR&ED began at $500,000 and meant that many smaller innovators could not qualify for the 35% rate.
Budget 2019 changes these factors to eliminate the income threshold; this supports more early-stage innovators that are scaling-up research activities, and companies that have variable income from year to year. Because of the change, more innovators will qualify for the 35% tax credit rate, providing a higher incentive for proceeding with experimental R&D activities.
Funding for Green Vehicles
Another tax measure outlined in Budget 2019 focuses on helping businesses adopt zero-emission vehicles. Specifically, businesses will be able to write-off the full cost of zero-emission vehicles in the year they’re put into use. This includes electric battery, plug-in hybrids, and hydrogen fuel cell vehicles purchased between March 19, 2019 and before January 1, 2024.
Several other measures were announced in Budget 2019 that will directly impact Canadian businesses and the government funding landscape. These include:
Funding for the Forestry Sector
Budget 2019 proposes up to $251.3 million in support over three years, starting in 2020-2021, for Natural Resources Canada (NRCan) to continue its work of encouraging innovation and growth in the forestry sector. This includes $91.8 million to support the Forest Innovation Program, $82.9 million for the Investments in Forest Industry Transformation program, $64 million for the Expanding Market Opportunities Program, and $12.6 million for the Indigenous Forestry Initiative.
Funding for Supply-Managed Sectors
Canada’s dairy, egg, and poultry sectors are facing significant pressures from changing industry demand and trade concessions made in three of the country’s most recent trade agreements. To help agricultural producers and processors navigate these changing market conditions, the government has pledged up to $3.9 billion in compensation, including up to $2.15 billion in direct compensation. The remaining funds will be invested in programs like the Quota Value Guarantee Program, Dairy Processing Investment Fund, and Dairy Farm Investment Program.
Funding for Western Economic Diversification
Budget 2019 outlines the commitment to provide up to $100 million in funding over three years, starting in 2019-2020, to support Western Economic Diversification Canada (WD). WD is one of Canada’s six regional development agencies (RDAs) and provides funding programs such as the Business Scale-up and Productivity program to qualified companies in Western Canada. This contribution will help support current programs and enable the development of new business supports.
Funding for Tourism
Employing over 750,000 Canadians, tourism is an important economic driver across the country. Maintaining the health of this sector is important to all Canadians, which is why Budget 2019 outlines up to $58.5 million in support over two years, starting in 2019-2020, which will flow to Canada’s six regional development agencies. These agencies will then administer the Canadian Experiences Fund, a new program that supports business investment in tourism-related infrastructure such as accommodations and local attractions.
Funding for Entrepreneurship Support
Futurpreneur Canada is a national non-profit organization that connects youth entrepreneurs to mentorship, growth resources, and startup financing. Budget 2019 will provide Futurpreneur Canada up to $38 million over five years, starting in 2019-2020, which will help to support the growth of approximately 1,000 entrepreneurs each year.
Funding for Broadband Infrastructure
Now recognized as a basic right in Canada, access to high-speed internet has become an increasing necessity, both for personal and professional use. Extending quality internet access to all Canadians, including those in rural and northern communities, is of great importance and can provide considerable economic development benefits, which is why Budget 2019 provides $5 billion to $6 billion over the next 10 years. This funding will support industry investment in internet infrastructure, support coordination among public and private institutions, lead to Low Earth Orbit satellite capacity, and extend government funding programs such as Connect to Innovate (CTI).
The cyclical nature of government funding makes it so that budget releases do not always provide a clear picture of business incentives moving forward. It often takes months or even years post-budget to develop a sense of how funding commitments will support businesses. While some provisions provide immediate impacts on the business climate, others will take time for commitments to turn into government funding programs.
For more information we recommend business owners and executives interested in learning how to prepare for government funding success should register for an upcoming funding webinar or event hosted by MentorWorks.
These free government funding sessions will cover trends in government funding programs, identify specific grants and incentives worth applying for, and explain how to optimize the funding identification and application process.
Mentor Works is a business support organization specializing in Canadian government funding. The Ontario-based business has helped hundreds of businesses build and execute their funding strategy through a mix of federal and provincial government grants, loans, and tax credits. Mentor Works offers free online resources, funding webinars, and news via their website at www.mentorworks.ca.
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