BC Tech welcomes today’s Federal Budget with the following valuable changes for BC innovators:

• the increase in the 35% refundable SRED expenditure limit from $3M to $6M
• the introduction of refundable SRED for eligible Canadian public companies
• the increase in the phase-out threshold for SRED expenditure from taxable capital of $50M to $75M
• the re-introduction of eligible capital expenditures for SRED and a temporary 100% expensing rate for the cost of eligible manufacturing or processing buildings
• $80M in funding for a new small and medium business procurement program

We expect the BC Government to introduce changes to mirror the Federal changes for Provincial SRED.

These Federal Budget measures are important and valuable steps to creating a more entrepreneur-friendly Canada, essential if we are to thrive in the new global economic conditions we face in 2025 and beyond.

Entrepreneurs and investors have a choice of where to put their money and other jurisdictions recognize the need to be globally competitive or risk losing the opportunity to build home-grown anchor companies. We need to make Canada a compellingly attractive place to grow companies.

The UK and Australia each have generous tax regimes to encourage entrepreneurs to base themselves there and to re-invest funds if shares are sold at a gain. Canada compares unfavourably to those global competitors and faces a stark contrast with the conditions available to US based entrepreneurs.

BC Tech believes Canada must reform key tax policies to ensure Canada continues to benefit from the value created by Canadian-founded entrepreneurs. We recommend:

• Expansion of the flow through share regime to include innovative industries such as Cleantech, Biotech, quantum computing, advanced manufacturing and artificial intelligence. Those industries are capital intensive with losses in the early years that would otherwise be trapped at the corporate level. Flow through treatment lowers the cost and risk of investment and secures capital for the company it would not otherwise be able to access.
• Establishment of a patent box regime to encourage the retention of key intellectual property assets and the high value jobs associated with those assets. This could be achieved in BC by leveraging the existing International Business Activity legislation.
• Exploration of an equivalent tax regime in Canada to the US Qualified Small Business Stock (QSBS) regime to allow an investment in a qualifying company held for a specified number of years to enjoy lower tax on realized capital gains. This regime encourages founders and others to make investments in the first place and to re-invest any proceeds from an exit into new qualifying companies, keeping much needed capital circulating and available to new startups.