The 2021 federal budget has proposed several measures that impact small- to medium-sized business in Canada. To follow is a summary of key announcements.
Extension of Canada Emergency Wage and Canada Emergency Rent Subsidies
Budget 2021 proposes to extend the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and the Lockdown Support until September 2021. The subsidy rates would gradually decline over the July-to-September period.
Canada Recovery Hiring Program
Introduction of new Canada Recovery Hiring Program (CRHP) will allow eligible employers to offset a portion of extra costs employers take on between 6 different hiring periods as they reopen between June 6 and November 20, 2021. Provided that an eligible employer’s decline in revenue exceeds the revenue-decline threshold for the qualifying period, the employer would be eligible for incremental remuneration (based on remuneration paid in the baseline period) multiplied by the applicable rate for that qualifying period. Eligible employers would claim the higher of the Canada Emergency Wage Subsidy or the new proposed subsidy.
Invest in the Industrial Research Assistance Program (IRAP)
The Industrial Research Assistance Program (IRAP) is a government funding program designed to accelerate the research and development projects of Canadian small- to medium-sized enterprises. Budget 2021 proposes to provide $500 million over five years, starting in 2021-22, and $100 million per year ongoing, to expand IRAP to support up to 2,500 additional innovative small and medium-sized firms.
Support for the Strategic Innovation Fund
The Strategic Innovation Fund’s (SIF) objective is to spur innovation for a better Canada by providing funding for large projects (over $10 million in requested contribution).
Budget 2021 proposes to provide the Strategic Innovation Fund with an incremental $7.2 billion over seven years on a cash basis, starting in 2021-22, and $511.4 million ongoing.
This funding will be directed as follows:
- $2.2 billion over seven years, and $511.4 million ongoing to support innovative projects across the economy—including in the life sciences, automotive, aerospace, and agriculture sectors.
- $5 billion over seven years to increase funding for the Strategic Innovation Fund’s Net Zero Accelerator, as detailed in Chapter 5. Through the Net Zero Accelerator the fund would scale up its support for projects that will help decarbonize heavy industry, support clean technologies and help meaningfully accelerate domestic greenhouse gas emissions reductions by 2030.
Reinvesting in the Superclusters Initiative
The Superclusters Initiative encourages industry leaders, small and medium-sized companies and post-secondary institutions to collaborate on large-scale projects, in order to speed up growth in some of Canada’s most promising industries:
- Digital technologies
- Plant proteins
- Advanced manufacturing
- Enhancing the use of artificial intelligence in supply chains
Budget 2021 proposes to provide $60 million over two years, starting in 2021-22, to the Innovation Superclusters Initiative.
Invest in a Renewed Venture Capital Catalyst Initiative
Budget 2021 proposes to make available up to $450 million on a cash basis over five years, starting in 2021-22, for a renewed Venture Capital Catalyst Initiative that would increase venture capital available to entrepreneurs.
$50 million of this amount would be dedicated to support venture capital investments in life science technologies. Another $50 million of this amount would support a new Inclusive Growth Stream to increase access to venture capital for underrepresented groups, such as women and racialized communities.
Canada Digital Technology Program
To fuel the recovery, jobs, and growth, the government is launching the Canada Digital Adoption Program, which will create thousands of jobs for young Canadians and help as many as 160,000 small and medium-sized businesses adopt new digital technologies.
This program will provide businesses with two streams of support:
To help main street businesses expand their customer bases online, they can access support to digitize and take advantage of e-commerce opportunities. Eligible businesses will receive microgrants to help offset the costs of going digital—and support to digital trainers from a network of up to 28,000 well trained young Canadians.
Some businesses will require more comprehensive support to adopt new technology, and a second stream will be in place for “off-main street” businesses, such as small manufacturing and food processing operations. Support for these businesses will emphasize advisory expertise for technology planning and financing options needed to put these technologies to use.
Extending timelines for Film Tax Credits
In recognition of the disruptions caused by the COVID-19 pandemic on film and video productions, Budget 2021 proposes to temporarily extend certain timelines for the Canadian Film or Video Production Tax Credit (CPTC) and the Film or Video Production Services Tax Credit (PSTC).
Budget 2021 proposes to extend by 12 months the following timelines with respect to the CPTC:
- The 24-month period to incur qualifying expenditures before the date that principal photography begins.
- The timeline to submit a certificate of completion to the Canadian Audiovisual Certification Office within 24 months of the end of the tax year in which principal photography began. This new 12-month extension would apply in addition to the existing 18-month extension that is available in this respect.
- The requirement that there be a written agreement with a Canadian distributor or with a broadcaster licensed by the Canadian Radio-television and Telecommunications Commission to show the production in Canada within 24 months of its completion.
Budget 2021 also proposes to extend by 12 months the 24-month timelines in respect of when aggregate expenditure thresholds must be met for film or video productions for the purposes of the PSTC.