2019 Federal Budget Funding Highlights
With the Federal budget released on March 19th, there are several new incentive programs along with budget renewals for existing programs. This year’s budget was titled “Investing in the Middle Class” and featured priority funding areas including housing, professional skill development, innovation, development, and forestry. Besides funding, there were commitments to reduce the burden of regulations that impact Canadian businesses. Here are a few of the most notable funding announcements broken down into sectors/purposes:
Strategic Innovation Fund Replenishment
The Strategic Innovation Fund (SIF) is the Federal Government’s flagship platform for advancing research and development in all sectors. In order to receive funding from the SIF program, projects will require a very high degree of innovation. Additionally, the project minimum spend was increased last year to $20 Million. The 2019 budget targeted two specific sectors:
- Manufacturing – SIF will be replenished with $100 million over the next four years, and manufacturers will have a chance to receive funding for innovative projects that will have a positive environmental impact and create new jobs. Reducing environmental impacts and increasing clean energy will be priorities for manufacturers that apply to this program in the future.
- Agri-Food – Similar to manufacturing, the budget has allocated an additional $100 million to the food processing sector through SIF. This funding will emphasize healthy food, Canadian exports and reducing food waste.
These increases are in addition to the $800 million of allocations that were announced to the program in November 2018.
Employers requiring training and apprentices
The 2019 budget will see the creation of 106 new funding programs across 30 agencies for career training. From student co-ops and apprenticeships to on-the-job training, it will be important to keep up to date with new opportunities that may reduce the costs of training.
The Canada Training Benefit was introduced, which will provide a $250 credit annually to each working Canadian to further their professional goals. However, this may negatively impact employers, as the program gives employees control of the training they receive.
The Student Work Placement Program will be given $781.2 million to help businesses provide students with a paid work experience. This is estimated to create over 60,000 new work placements for post-secondary students in the next 5 years and will likely present businesses with more options for hiring employees in the future.
There will also be a number of hiring opportunities for under-represented groups in businesses, as there is a combined $435.6 million in funding for women, indigenous, youth, anti-racism, and global talent. These initiatives will benefit businesses in developing a more diverse and inclusive workplace.
One of the largest priorities outlined in the Federal budget was the need for housing solutions to the short housing supply. The government established the Housing Supply Challenge with up to $300 million awarded to municipalities that can reduce barriers to creating new housing. Communities with new ideas will compete for funding with more details to be provided over the summer.
Infrastructure was also identified as a major priority in the budget. The government has allocated $2.2 billion to address the infrastructure deficits felt by municipalities. An additional $6 billion in funds will be used to upgrade broadband in Northern and rural communities, including the establishment of a $1.7 billion Universal Broadband Fund. The Municipal Asset Management Capacity Fund will also receive $60 million to help small communities learn to grow and maintain infrastructure assets.
Municipalities will also receive $1.01 billion to increase energy efficiency. Part of the funds will be administered through the Green Municipal Fund, which will be replenished with $950 million focusing on energy efficiency. These funds will allow municipalities to retrofit and improve older buildings with energy saving technology.
The forestry sector will receive $251.3 million over three years to support innovation, commercialization, expanding market opportunities, economic growth, and jobs. These funds will leverage private funds to keep the Canadian forestry competitive overseas. More details will be released throughout 2019.
Following the recent CETA and CPTPP agreements, the federal government has proposed $3.9 billion to support Canada’s farmers. $2.4 billion of these funds will be used to support dairy, poultry, and egg farmers in 2019. $250 million has already been distributed through the Dairy Farm Investment Program in 2018.
An additional $1.5 billion will be set aside for the Quota Value Guarantee Program, which will protect against the reduction in quota value investments made by farmers in supply-managed sectors.
Free Trade Agreement Measures and Steel Safeguards
$12 million has been allocated to modernize trade relationships across North America. This includes administering steel safeguards on imports for certain products.
Western Economic Development
$100 million in funds will go to Western Economic Diversification Canada for a strategy to create a more diversified strategy in the West. These funds will likely materialize into programs that will help Canadian businesses.
Innovation and Science
The budget proposes establishing a Strategic Science Fund that will work to provide third-party opportunities to consult for government organizations.
Northern Innovation and development
The economy across Canada’s North will receive an investment of $75 million over five years to be a target for economic growth. This will include an extension of the Mineral Exploration Tax Credit, which will help companies finance exploration of Northern Canada for mining opportunities.
$58.5 million over two years will be given to the Regional Development Agencies to create the Canadian Experiences Fund. The fund will be used to help Canadian businesses create and expand tourism-related infrastructure.
Non-Profits and Community Organizations
The Social Finance Fund will be established to provide funding to projects that will have a positive social impact, including reducing poverty, expanding employment opportunities or building affordable housing.
Scientific Research and Experimental Development Program (SR&ED)
Under the current SR&ED program, public companies and unincorporated businesses are eligible for a 15% non-refundable tax credit on expenditures related to scientific research and experimental development. However, CCPCs are eligible for a 35% tax credit up to a $3 million threshold. The refund a company receives is dependent on their taxable income which, in turn, affects their expenditure limit. The 2019 budget proposes to remove this barrier, which will generate greater benefits for those firms that are up against the cap.
Canadian Film or Video Production Tax Credit
Canadian film and video productions are eligible for a 25% refundable tax credit on labour costs. This tax credit is limited to 15% of the total cost of production.
Refundable Labour Tax Credit (Journalism)
Newsrooms will receive a 25% refundable tax credit on salary and wages for labour costs up to $55,000 per employee.
Small farming and fishing businesses
The sale of farming products and fishing catches to any corporation will receive tax relief. This will apply to all taxation years beginning after and including the 2016-2017 fiscal year.