2023 federal and provincial budget digests

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2023 federal and provincial budget digests

How the 2023 federal and provincial budgets will impact the startup and innovation economy

In March, the federal and provincial governments unveiled their highly-anticipated budgets. With both plans moving from COVID-19-specific funding and focusing on lightening deficits and combatting inflation, we now have glimpse into what the road to a more robust economy looks like.

DMZ has reviewed the Ontario provincial and federal government budgets and identified key commitments that impact the startup and innovation economy.

Here’s what you need to know about both budgets:

Federal budget highlights

The full federal budget can be found here.

Small business support

Lowering credit card fees: The federal government has reached an agreement with Visa and MasterCard to reduce credit card fees by up to 27%.
- This reduction will help small businesses save $1 billion over the next five years.

Innovation

Canada Growth Fund: The government intends to introduce legislation to enable the Public Sector Pension Investment Board to manage the assets of the Canada Growth Fund to deliver on the Growth Fund’s mandate of attracting private capital to invest in Canada’s clean economy.
Supporting Canada’s leadership in space: The government invested just under $2.8 billion to get Canadians — and Canadian technology — into space, onto the moon and beyond.
Canada Innovation Corporation: The government invested $2.6 billion for the new Canada Innovation Corporation, which will support Canadian businesses in investing in research and development.
Scientific Research and Experimental Development Tax Incentive: The Department of Finance will continue to engage with stakeholders on the next steps of the SR&ED program to ensure it is providing adequate support and improving the commercialization of intellectual property.

Transition to the green economy

Clean electricity investment tax credit: A 15% refundable credit to support non-emitting generation systems, storage and transmission.
Clean technology manufacturing: A 30% tax credit for new machinery and equipment used to manufacture or process key clean technologies and extract key critical minerals.
Clean hydrogen: Up to 40% tax credit for projects producing clean hydrogen.
Strategic Innovation Fund: A $500 million commitment over 10 years to support the development and application of clean technologies in Canada.
Smart Cities Challenge: The government will be launching a new round of the Smart Cities Challenge later this year, which will focus on using connected technologies, data, and innovative approaches to improve climate resiliency.

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Provincial budget highlights

The full provincial budget can be found here.

Innovation

Underserved entrepreneurs: Investing an additional $15 million over three years for the Racialized and Indigenous Supports for Entrepreneurs (RAISE) Grant Program that includes support for Indigenous, Black and other racialized people, as well as an additional $3 million in the Black Youth Action Plan
Innovation hubs:
- Providing an additional $1 million per year for three years to Invest Ottawa, starting in 2023–24, to expand into a Regional Innovation Centre hub for Eastern Ontario.
- Committing an additional $2 million in 2023–24 to Futurpreneur Canada.
- Providing $4 million in 2023–24 to support the City of Brampton in attracting more entrepreneurs and business investment to help drive economic growth.

Skills development

Mitacs: Investing an additional $32.4 million over the next three years to support 6,500 high‐quality research internships through Mitacs.
Skills Development Fund: Providing $224 million in 2023–24 for a new capital stream of the Skills Development Fund to leverage private-sector expertise and expand training centres.

International talent

Ontario Immigrant Nominee Program: Enhancing the Ontario Immigrant Nominee Program with an additional $25 million over three years to attract more skilled workers, including in-demand professionals in the skilled trades, to the province.
Ontario Bridge Training Program: Expanding the Ontario Bridge Training Program with an additional $3 million in 2023–24 to help internationally trained immigrants find employment in their fields and get faster access to training and support towards a licence or certificate.

Manufacturing

Ontario-made tax credit: A 10% refundable Corporate Income Tax credit to help local manufacturers lower their costs, invest in workers, innovate and become more competitive.

Business savings for Ontario employers

Tax relief for small businesses: Improving competitiveness by planning to enable an estimated $8 billion in cost savings and support for some Ontario employers in 2023, with $3.6 billion going to small businesses.
- This would provide Ontario’s small businesses with additional Ontario income tax relief of $265 million from 2022–23 to 2025–26.

Electric vehicle investments

Electric vehicles (EV): Attracting over $16 billion in investments by global automakers and suppliers of EV batteries and battery materials to position Ontario as a global leader in the EV supply chain.

Are you a founder trying to navigate the startup ecosystem? Learn more about programming DMZ offers here.

Startups, here’s how you can prepare to combat an economic downturn

A blueprint to super-proof your startup and protect against economic instability.

With record-high inflation, wars overseas and rising interest rates, experts are telling Canadians to brace for an economic downturn and warning signs are starting to trickle to the startup and innovation economy, which can affect in a multitude of ways.

Over the last year, Canada’s tech ecosystem showed explosive growth – in fact – a recent BDC VC report showed that Canada had a record year for venture capital, breaking records by almost every metric.

While some in the startup ecosystem are sounding their warning bells, like Silicon Valley-based Y-Combinator, the industry is still positioned to continue its growth. Is it always going to be clear sailing? No. But what we’re seeing is not a halt to our momentum but rather a course correction.

It’s second nature for startups to pivot and change their mindsets to focus on the opportunities at hand. Just look at Uber, Pinterest and Whatsapp, all household names that came out of the 2008-2009 recession!

We’re here to make sure that founders stay resilient, agile and are prepared to bear the punches that may come their way.

So what can you do to start planning ahead and super-proof your business? We’re glad you asked.

1. Leverage liquidity.

Finding the right liquidity balance for your business can not only help you gain insight into if you have enough cash to pay off your short-term liabilities. but also allows you to set yourself up for strategic growth. Having enough cash on hand is important to meet financial obligations, but holding onto too much cash might leave important investment and growth opportunities on the table. Finding the right balance will ensure long-term stability and provides a good first impression when looking to secure a loan or other funding.

2. Budgeting, budgeting, budgeting.

This goes without saying, but take a moment to sit down and understand exactly where your money is going and where your main sources of revenue are coming from. Getting a thorough understanding of finances will help make tough decisions – if need be – quickly and effectively.

3. Lock in longer commitments.

Focusing on closing longer commitments such as subscriptions or multi-year agreements with customer, partnerships and client can ensure financial security in uncertain circumstances. Recession or not, this is a great tip for any startup that is looking to extend its runway and demonstrate loyalty to customers and partners.

4. Cut costs.

It’s only natural to turn to cost-cutting measures but it’s important to remember one thing – cutting costs does not mean you need to let go of talent. Cutting costs means reevaluating your spending to axe unnecessary costs. Create plans for different levels of financial scarcity to work for different scenarios the ecosystem throws at you.

5. Back-up business plans are your best bet.

This is similar to the last point, but apply it to your entire business plan. Your best bet in preparing for the unknown is to create multiple overarching plans that fit a range of realistic possibilities. These plans should include securing funding as planned, securing a smaller amount and not being able to secure funding at all. Look at other forms of funding as alternatives, whether it be grants, crowdfunding, bank loans or support from family and friends.

Want to learn more about how you can solidify your contingency plans? Apply to a DMZ program here.

2022 federal budget digest

How the 2022 federal budget will impact the startup and innovation economy.

Last week, the federal government unveiled their long-awaited budget for 2022, which outlines a number of commitments for the Canadian tech and innovation economy.

The first budget since the Liberal’s re-election last fall, the 2022 budget focuses on growing the Canadian economy while aiming to make everyday life more affordable. Working to reduce its projected deficit, a majority of the government’s new commitments are program-focused, rather than large cash injections.

We thought we would help out our community by breaking down the budget to highlight what should be on your radar, and how it will impact the startup and innovation economy.

The full federal budget can be found here.

AN OVERVIEW: BIG TICKET COMMITMENTS

Canadian Innovation and Investment Agency: $1 billion over five years towards the creation of a new agency designed to invest in innovation, research, and development.
Canada Growth Fund: A $15 billion growth fund to encourage private sector investment to meet net-zero climate goals and strengthen supply chains.
Intellectual property: $96.6 million over five years to build a world-class intellectual property regime, by building on previous investments.
Scientific Research and Experimental Development (SR&ED): A review of SR&ED to eliminate paperwork needed for the program for startups.
Accelerator to increase housing supply: Accelerator fund to encourage municipal governments to zone for more housing over the next five years.
Dental-care and pharmacare: Plans to cover the cost of dental care for lower income Canadians and plans to create a national pharmacare program.

INNOVATION INVESTMENTS

A new Canada Growth Fund to encourage private sector investment to meet net-zero climate goals and strengthen supply chains.

$15 billion in public capital over five years designed to incentivize private-sector investment in emissions reduction, economic diversification and supply-chain projects. The new program will run at arm’s length from the government. It will make investments in businesses in firms for equity stakes, loan them money or issue financing guarantees.

A new Canadian Innovation and Investment Agency to invest in innovation, research, and development.

The new agency, modelled after programs in Finland and Israel, will operate independently and will be funded with $1-billion in new spending over five years. Moreover, the government will consult further with Canadian and global experts in finalizing the design and mandate of the new agency. Furthers details will be announced in the 2022 fall economic and fiscal update.

INTELLECTUAL PROPERTY

The government has committed more investment into Canada’s national IP initiatives, including:

A new national lab-to-market platform to help graduate students and researchers take their work to market;
Investment for the CanExport program to help Canadian businesses secure their intellectual property in foreign markets;
A new survey to assess the government’s previous investments in science and research, and how knowledge created at post-secondary institutions generates commercial outcomes;
Expanding ExploreIP, Canada’s intellectual property marketplace, so that more public sector intellectual property is put to use helping Canadian businesses; and,
Expanding the Intellectual Property Legal Clinics Program, which will make it easier to access basic intellectual property services.

SR&ED REVIEW FOR STARTUPS

A review of the scientific research and experimental development (SR&ED) tax incentive, assessing whether it’s effective in encouraging R&D that benefits Canada will be done. Additionally, the government is considering instituting a patent-box regime to ensure ideas generated domestically turn into IP that stays here.

Startups have long complained about the amount of paperwork involved with accessing SR&ED, and the assessment could translate to startups receiving higher payouts from SR&ED, or at least less paperwork to complete.

SUPERCLUSTERS REBRAND

The federal government is extending Canada’s Superclusters and is rebranding it to be called Canada’s Global Innovation Clusters. The budget proposes an additional $750 million into the program over six years.

The Superclusters was originally created to focus on projects leveraging plant proteins, advanced manufacturing, AI and oceans. With the rebrand, the government hopes to see the Global Innovation Clusters play a role in greater projects, such as climate change.

TAX RATE EXTENSIONS FOR SMALL BUSINESSES

Taxable capital for small businesses is increasing from $15 million to $50 million.

Currently, the government taxes small businesses at a reduced rate of 9% on the first $500,000 of taxable income. However, small businesses lose the reduced rate once they hit $15 million. The new budget plans to increase the taxable income limit to $50 million.

SUPPORT FOR SMALL BUSINESSES IN HEALTH TECH

$30 million was committed to expand the CAN Health Network, which is a national partnership comprised of leading Canadian health organizations that work to introduce new solutions into the health care system.

The government hopes to expand the program nationally to Quebec, the territories, and Indigenous communities.

Are you a founder trying to navigate the startup ecosystem? Learn more about programming the DMZ offers here.

Third photo: piggybank.ca

2023 federal and provincial budget digests

Tag Archives: startup economy