(As originally published in Financial Post, 23 March 2017)
2017 budget offers five key developments for Canadian entrepreneurs
By: Dean Radomsky, Tax Partner in EY Canada’s Private Client Services practice, and Calgary EY Entrepreneur Of The Year Awards Leader
Billed in advance as a cornerstone of the federal government’s Innovation Agenda, this year’s budget outlines the Government of Canada’s proposed Innovation and Skills Plan, which aims to expand growth and create jobs. Although the $300-billion budget describes several proposed commitments related to innovation, Canadian entrepreneurs will have to wait for clarity to emerge as many of these new investments or programs will be further defined in the months to come.
Entrepreneurs and business owners will be relieved that the budget includes neither an increase in capital gains taxes nor changes to the treatment of stock options, rumours of which had rattled the small business community in the weeks leading up to today’s announcement. However, Finance Minister Bill Morneau made it very clear in his speech to Parliament that this government, as first outlined in its election platform, remains committed to improving tax fairness by shutting down tax planning arrangements that solely benefit wealthy Canadians. This may signal forthcoming tax changes that could affect entrepreneurship, innovation and investment in Canada.
While the budget outlines the government’s direction and broad commitment to innovation, it remains somewhat light on details for the programs and investments it has proposed. Nonetheless, it’s clear that the innovation focus is anchored by three key strategic pillars: equipping Canadians young and old with future-forward skills; fostering research, development and commercialization; and addressing investment gaps and the overall simplification of existing government programs. Many of the programs and investments are centred on specific industries, including advanced manufacturing, clean technology, digital industries and agri-food, health/bio sciences and clean resources.
While entrepreneurs wait for more program details, they can zero in on these five developments that are likely to shape Canada’s entrepreneurial landscape in 2017:
- Venture Capital Catalyst Initiative program: This new program will make $400M available to augment private sector funding of late-stage venture capital to Canadian entrepreneurs. This may help those companies seeking funds to bridge the commercialization gap.
- Strategic Procurement: In essence, federal departments and agencies will be funded to procure goods and services from Canadian innovators and entrepreneurs, in a new program modelled after a U.S. initiative. This could represent valuable opportunity for many businesses across the country.
- Intellectual Property Strategy 2017: The government will develop a modernized intellectual property strategy in the coming year.
- Streamlining Immigration: The budget outlines immigration programs designed to help attract top talent to Canada, with a particular focus on skilled talent that can help our entrepreneurs innovate. Many companies and entrepreneurs will applaud this initiative as the talent crunch remains a key area of concern.
- Creation of Superclusters: A commitment of $950 million over five years — increased from last year’s initial commitment of $800 million — will fund a new competition to support a handful of business-led innovation “superclusters” with the greatest potential to accelerate economic growth. These clusters are expected to be dense areas of business activity involving large and small companies, post-secondary institutions and specialized talent and infrastructure, collaborating to drive commercialization and economic growth.
As program and investment details emerge, Canadian entrepreneurs will want to remain on high alert, ready to assess with their advisors each new development and implementation for potential implications for their businesses.