Jill Tipping, President & CEO, BC Tech

BC Tech welcomes yesterday’s Federal Budget, which brought valuable changes for BC innovators. Credit where it’s due: this is a budget that listened to the people who build companies, and made good choices in a difficult fiscal context. Canada is now a more compelling place for entrepreneurs to start, grow and stay.

A Canadian QSBS equivalent: delivered

Most significantly Budget 2026 introduced a new Canada Growth Incentive, effectively a Canadian version of the US Qualified Small Business Stock (QSBS) regime. This is a gamechanger, exempting up to $15M in capital gains on qualifying shares held for at least three years, in companies with up to $100M in assets. What it means is that founders with a $15M gain will now keep nearly 96% of it on exit. Introducing a QSBS-style regime for Canada was BC Tech’s number one recommendation to the Federal Government so we’re delighted to see it introduced in Budget 2026.

SRED for commercialization: delivered

We were also pleased to see the extension of SRED to qualifying commercialization expenses, a long-standing BC Tech policy recommendation. While tax credits for R&D are essential to fund research and innovation in Canada, that is not all that is needed to build strong Canadian anchor companies.  Extending SRED to commercialization expenses is a welcome change that recognizes the reality that it is commercialization that delivers scaled-up businesses. CRA will issue sector-specific guidance on what costs will qualify for the credit – with a Budget envelope of $930M over five years it is likely to be limited at the outset.

Flow-through shares for tech: not this time

One key thing missing was the expansion of the flow-through share regime (which currently applies to mineral exploration and renewable energy projects) to cleantech, biotech, quantum computing, advanced manufacturing and artificial intelligence. These industries are also capital intensive with losses in the early years. Flow-through treatment allows losses that would otherwise be trapped at the corporate level to pass through to investors, lowering the cost and risk of investment, which provides qualifying companies with capital they would not otherwise be able to access.

And the rest

Other key measures for innovators in Federal Budget 2026 included:

• an enhanced small business rollover that will give investors more time to reinvest the proceeds of an exit into another Canadian company
• a further $1B over six years for the Strategic Response Fund, starting in 2028-29
• support for Canadian AI companies to access 500 megawatts of sovereign compute
• the merger of BDC and EDC into a single Crown corporation, giving companies one front door for federal financing and export support

Over to you, BC

Several of the Budget’s measures will deliver most benefit to BC if the new Provincial Government is ready to leverage them in their first Budget. BC’s $400M Strategic Investment Special Account enables the province to co-invest alongside the Strategic Response Fund and should be deployed at the scale-up stage. With Ottawa backing sovereign AI compute and a $50B expansion of Canada’s electricity grid, BC’s clean power is a real advantage – one a BC AI Economic Strategy would help secure. And BC should mirror the Federal SRED changes in the Provincial SRED credit.

BC Tech’s grade: A-

Budget 2026 represents a big step forward for BC innovators, with room to do more in future. BC Tech’s Grade is A-.