CANADA’S BUDGET 2021
On April 19, 2021, Canada tabled its first Budget in two years. The budget titled A Recovery Plan for Jobs, Growth, and Resilience is clearly responding to the economic impacts of the pandemic on many sectors across the country. The Budget includes new IP related programs, the details of which are to be worked out over the next several months as the government seeks to create action plans to implement the strategy.
The following is a brief summary of the IP related programs that were announced in Budget 2021.
IMMEDIATE EXPENSING OF IP
Allow immediate expensing of up to $1.5 million of eligible investments by Canadian-controlled private corporations made on or after Budget Day and before 2024. Eligible investments will cover over 60 per cent of capital investments typically made by Canadian-controlled private corporations.
This incentive targets short- and medium-term capital investments that can accelerate our recovery. This includes investments in a broad range of assets, including, helping to further incentivize businesses to transition to a more productive, knowledge-intensive economy and will include digital assets and intellectual property.
These larger deductions will help businesses—particularly small and medium sized businesses—by making it more attractive to invest in assets that drive growth. Larger deductions will also free up capital that businesses can use to create more good middle class jobs.
SUPPORT USE OF IP BY SMALL BUSINESSES
To make sure small business and independent entrepreneurs can access the capital they need to recover, innovate, and grow in the long-term Budget 2021 proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These proposed amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses. They include:
- expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses
- increasing the maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 years for equipment and leasehold improvements.
- Expanding borrower eligibility to include non-profit and charitable social enterprises.
- Introducing a new line of credit product to help with liquidity and cover short-term working capital needs.
PROMOTING CANADIAN IP SERVICES
To further support Canadian innovators, start-ups, and technology-intensive businesses, Budge 2021 proposes
- Spending $90 million, over two years, starting in 2022-23, to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert intellectual property services.
- Spending $75 million over three years, starting in 2021-22, for the National Research Council’s Industrial Research Assistance Program to provide high-growth client firms with access to expert intellectual property services.
These direct investments will be complemented by a Strategic Intellectual Property Program Review that will be launched by the Government. It is intended as a broad assessment of intellectual property provisions in Canada’s innovation and science programming, from basic research to near-commercial projects. This work will make sure Canada and Canadians fully benefit from innovations and intellectual property.
Moffat & Co. will stay involved in the process and continue to keep you updated on the developments. Please contact us should you have questions or want to learn more.