Federal Budget 2017 Highlights

Federal Finance Minister Bill Morneau’s second budget, tabled on March 22, 2017, forecasted an increase in the 2017-2018 deficit from $25.4B (projected in the fall) to $28.5B. Deficits are expected to decline gradually to $18.8 billion by 2021-2022.

There were no proposed changes to the corporate income tax rates or to the $500,000 Small-Business Deduction Limit for Canadian-controlled private corporations (CCPCs).

Budget 2017 provides a platform for the anticipated Innovation Agenda by proposing several new initiatives including:

Skills Development

  • $2.7B over 6 years for skills training programs through labour market transfer agreements with the provinces and to expand eligibility relating to Employment Insurance (EI) skills training/employment support;
    • Programming, and/or metrics to measure performance, will depend upon negotiations with provinces;
  • $225M over 4 years, starting with $75M in 2018 and an additional $75M per year thereafter, to establish a new agency to research and measure skills development;
  • $7.8M over two years, starting in 2017, to implement the new Global Talent Stream under the temporary Foreign Worker Program, and to introduce a new work permit exemption for short-duration work terms under the Global Skills Strategy;
  • $287.2M for a pilot project taking place over three years, starting in 2018-2019, to increase mature student access to government student grants and loans;
  • $395.5M, over three years for a youth employment strategy; and
  • $50M over two years to support initiatives aiming at teaching students to code.

Innovation

  • $950M, provided on a competitive basis over 5 years starting in 2017, to support business-led “superclusters” in clean technology, advanced manufacturing, digital technology, health/bio sciences, clean resources, and agri-food;
  • $125M to launch a pan-Canadian Artificial Intelligence Strategy to be administered by the Canadian Institute for Advanced Research (CIFAR); and
  • $2.2B to accelerate growth in Clean Technology, of which $1.4B will be provided through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).

Startups and Small Businesses

  • $400M to BDC over 3 years, starting in 2017, for a new Venture Capital Catalyst Initiative to increase availability of late-stage venture capital;
  • Additional private funding available through the recently announced Canadian Business Growth Fund, which was created by Canada’s leading banks and other key financial institutions to provide long-term capital through minority interests in small- and medium-sized Canadian enterprises; and
  • A commitment to review the use of tax planning strategies involving private corporations, which can result in  tax advantages.

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