On April 7, 2022, the Canadian government unveiled its 2022 federal budget. #budget2022
This year’s budget focuses on several key priorities, including ongoing support for the well-known Scientific Research and Experimental Development (SR&ED) program and the launch of a Canadian Innovation and Investment Agency to help Canadian businesses and entrepreneurs grow through research and development (R&D) and innovation.
The budget also introduces a new Canada Growth Fund to encourage private sector investment, along with millions in funding for the semiconductor and climate solutions sectors. Key budget priorities include:
- Pandemic recovery
- Economic growth
- Tackling Canada’s affordable housing challenge
- Boosting investment for small businesses and supporting business growth overall
- Clean air, middle-class jobs
- Public health care
- Tax fairness
- Inclusivity
- Other important fiscal measures
Boast supports innovative Canadian companies and entrepreneurs who invest in R&D. This year’s budget continues to back these businesses and entrepreneurs with strong government policies—tax strategies, ongoing R&D tax incentives, and labor measures for hiring full-time, part-time, and contract workers.
2022 Budget and SR&ED—A Cornerstone of Innovation
For the SR&ED tax credit program, this year’s budget proposes ongoing support for businesses investing in R&D and innovation through SR&ED tax credits. The federal government calls SR&ED a ‘cornerstone’ of Canada’s innovation strategy and plans to look for ways to improve the program. The budget review notes (emphasis added by Boast):
The Scientific Research and Experimental Development (SR&ED) program offers tax incentives to encourage Canadian businesses of all sizes and sectors to invest in R&D. The SR&ED program has been a cornerstone of Canada’s innovation strategy. The government plans to review the program to ensure it effectively encourages R&D that benefits Canada, and also to explore ways to modernize and simplify it. Specifically, the review will look at whether changes to eligibility criteria are needed to ensure adequate support and improve the program’s overall efficiency.
As part of this review, the government will also consider whether the tax system can help encourage the development and retention of intellectual property resulting from R&D done in Canada. In particular, the government will examine, and seek input on, whether adopting a patent box regime would help achieve these goals. https://budget.gc.ca/2022/report-rapport/chap2-en.html#2022-0
“We’re pleased to see continued support—and the potential for simplification—of the valuable Canadian SR&ED tax credit program,” said Alex Popa, Boast CEO and co-founder. “Canada’s innovation thrives because businesses can invest in new technologies and processes, and receive support and relief for those investments through government programs like SR&ED. Our goal is to help as many Canadian businesses as possible claim their eligible share of the estimated $4 billion available each year through the SR&ED program.”
The New Canadian Innovation and Investment Agency
The budget also introduces a new Canadian Innovation and Investment Agency to accelerate innovation. As the budget states, “Our country has never lacked good ideas. But to grow our economy, invention alone isn’t enough. Canadians and Canadian companies need to turn their new ideas and technologies into new products, services, and growing businesses. Yet, Canada currently ranks last in the G7 for business R&D spending. That needs to change.”
From the 2022 budget, here are some highlights from Boast that support the new budget’s goal to accelerate innovation and R&D in several ways:
https://budget.gc.ca/2022/report-rapport/chap2-en.html#2022-1
Strengthening Canada’s Semiconductor Industry
The federal government announced $150 million to support investments in developing and supplying semiconductors. This builds on the $90 million allocated in Budget 2021 to upgrade and modernize the National Research Council’s Canadian Photonics Fabrication Centre, which provides photonics research, testing, prototyping, and pilot-scale manufacturing services to Canadian academics and businesses.
In addition to these previous investments, Budget 2022 proposes $45 million over four years, starting in 2022-23, on a cash basis, for Innovation, Science and Economic Development Canada to work with stakeholders, conduct market analysis, and support projects that will strengthen Canada’s semiconductor industry.
Growing Canada’s Health-Focused Small and Medium-Sized Businesses
The Coordinated Accessible National Health Network (CAN Health Network) brings together hospital networks and health authorities in nine provinces to source innovative health care solutions, including investing in Canadian-made technologies. This model shows real potential to deliver better care for Canadians, help our health tech businesses grow, and create good middle-class jobs across the country.
The 2022 budget proposes $30 million over four years, starting in 2022-23, to build on the CAN Health Network’s success and expand it nationwide to Quebec, the territories, and Indigenous communities.
Making Canada’s Economy More Competitive
A competitive economy is one that’s fair, growing, and innovative. To that end, the government will consult widely on the role and operation of the Competition Act and its enforcement. However, there are also gaps in the Act that can be addressed now to bring Canada in line with international best practices.
The 2022 budget announces the government’s plan to introduce legislative changes to the Competition Act as a first step in modernizing competition rules. This will include closing loopholes, tackling practices that harm workers and consumers, modernizing access to justice and penalties, and updating the law for today’s digital world.
Supporting Canada’s Innovation Clusters
Since their launch in 2017, Canada’s innovation clusters have helped build thriving innovation ecosystems across the economy. These include plant-based protein alternatives, ocean industries, advanced manufacturing, digital technologies, and artificial intelligence.
As of December 2021, Canada’s innovation clusters had approved over 415 projects with 1,840 partners, totaling more than $1.9 billion. These projects are supported by co-investment from government and industry across 11 provinces and territories. Together, they’ve also generated more than 850 new intellectual property rights.
The 2022 budget proposes $750 million over six years, starting in 2022-23, to further grow and develop Canada’s Global Innovation Clusters. Building on their success so far, these clusters will expand their national reach and collaborate to deepen their impact, including through joint missions aligned with key government priorities like fighting climate change and addressing supply chain disruptions. To maximize the impact of this funding and ensure it meets industry and government needs, it will be allocated competitively among the five clusters.
Investing in Intellectual Property and Research
Investing in and protecting intellectual property and research are essential to building an innovative economy.
Responding to the needs of innovators, Budget 2022 helps protect and expand intellectual property and research, attract top researchers, advance critical research priorities, and strengthen the security of our research institutions.
Building a World-Class Intellectual Property Regime
Businesses that own patents grow faster and pay higher wages. However, when it comes to the number of patents held, Canada lags behind other countries we compete with for investment and economic growth.
Since 2015, the federal government has taken important steps to improve Canada’s intellectual property performance, including launching the National Intellectual Property Strategy in 2018, and introducing Elevate IP and IP Assist in Budget 2021.
