The Voice: Federal Budget 2016

Author: Bill Tam

On March 22, 2016, Minister of Finance, Bill Morneau, released a much-anticipated 2016 federal budget outlining Canada’s new economic policy agenda. Appropriately titled “Growing the Middle Class,” the budget signals a clear shift in approach, embracing fiscal stimulus with a projected deficit of $29.4 billion in 2016-17 to support growth. One of the more important aspects of Budget 2016 was the Government’s decision not to change stock option taxation as originally promised in their election platform. BCTIA, along with our colleagues across the country, advocated strongly against any changes to stock option taxation and we were pleased to see government listen to the many voices of our tech community.

Click the image to download the full Federal Budget 2016

While the Government is expected to unveil a more comprehensive strategy by the end of 2016 as part of its Innovation Agenda, BC’s technology industry will benefit from a number of the measures outlined in this budget that focus on business, science, research, and technology. The full budget can be downloaded here, and below are some relevant highlights:

Markets & Commercialization Measures

  • Clean technology development and commercialization: As expected there is a big focus on accelerating the clean technology industry, with $1 billion over four years allocated towards research, development, and demonstration, to accelerate the commercialization of promising technologies. BC’s strong cohort of cleantech companies stand to benefit in the coming years.
  • Strategic infrastructure investments at post-secondary institutions: To reinvigorate Canada’s research and science base, foster research excellence, and accelerate commercialization of knowledge into application, $2 billion will be spent over three years, to improve infrastructure and research & training facilities at universities and colleges, via a new Post-Secondary Institutions Strategic Investment Fund. Up to 50% of the eligible costs of infrastructure projects at post-secondary institutions and affiliated research and commercialization organizations will be covered, in collaboration with provinces and territories.
  • Renewed Canadian Technology Accelerator Initiative: $4 million over two years will go to renew this initiative to link Canadian tech companies to global markets and expertise. This program, managed by the Canadian Trade Commissioner Service, supports Canadian ICT, life sciences, and clean technology firms by providing introductions to potential clients/partners, mentorship, and office space in business accelerators in nine locations in the United States, United Kingdom, France, and India.
  • Improved digital infrastructure: Up to $500 million over five years will go towards a new program to extend and enhance broadband to remote and rural communities, which will improve access for these communities to the digital economy.

Capital & Tax Measures

  • The Labour-Sponsored Venture Capital Corporations Tax Credit: To facilitate access to venture capital for SME businesses and support saving by the middle class, the budget will restore the LSVCC tax credit to 15 per cent for share purchases of provincially registered LSVCCs for 2016 and subsequent tax years.
  • Stock option taxation: In response to the broadly voiced concerns from the tech industry on the war for talent, Budget 2016 did not include any changes to the taxation of stock options. Stock option incentive programs remain an essential component in attracting critical talent to fuel the growth of Canada’s tech industry. This was a critical issue for the tech industry and reflected the concerns voiced by the BCTIA and our national colleagues at Communitech, CVCA, CATA, CCI and ITAC along with the expert committee of BC tax specialists from PwC, Deloitte, EY and KPMG.

Scaling Company Capacity Measures

  • Scale-up of high-impact firms: Investing in high-impact firms to grow and eliminating challenges at key stages of transition can play an important role in creating jobs and generating economic growth. A new initiative in 2016-17 will be launched that coordinates federal services tailored to the needs of 1,000 target companies, such as financing solutions, advisory, and export services from key federal delivery organizations to help companies succeed and further their global competitiveness.
  • National Research Council’s Industrial Research Assistance Program: An additional $50 million in 2016–17 will be allocated to increase the number of companies served by the NRC-IRAP program’s highly qualified Industrial Technology Advisors nationwide. The program supports innovative small and medium-sized companies through advisory services, research, and development project funding.
  • Innovation Clusters and Networks Mapping: The budget allocates up to $800 million over four years to support innovation networks and clusters, and to develop a nationwide Cluster Mapping portal to inform the design and delivery of programs by all levels of government.
  • Performance framework for business accelerators and incubators: The government will work with stakeholders to develop a performance measurement framework for business accelerators and incubators that will enable these organizations to benchmark their performance and drive improvement in services, help tech companies to choose their best options for support, and assist governments at all levels in increasing the effectiveness of public investments in this area.

Talent Measures

  • Co-op placements and work-integrated learning: The government will spend $73 million over four years and launch the Post-Secondary Industry Partnership and Co-operative Placement Initiative in 2016; to support partnerships between employers and willing post-secondary educational institutions to better align what is taught with the needs of employers; and to support new co-op placements and learning opportunities for young Canadians, with a focus on high-demand STEM and business fields.
  • Incremental support to post-secondary students: To address the affordability, accessibility, and debt loads of post-secondary education, the government will increase the Canada Student Grant amounts available for the 2016 academic year. This will be the first update since 2009.
  • Immigration: While there is a commitment to achieving higher permanent resident admissions, there are no concrete immigration policy changes for specialized and technical talent. The BCTIA will continue to advance this dialogue in the coming months, as this is continues to be a significant issue for the BC tech community. 

BCTIA’s mission is to help tech companies grow in BC, particularly the next generation of mid-sized anchor companies. It is too early to know the budget’s broader implications for BC’s tech sector; however we are pleased to see government action on key policy focus areas mentioned above and to be in alignment around scaling “high growth” companies.

Public policy and innovation are mutually dependent, and we look forward to working with the government on the implementation of these strategies.

To share insights about public policy issues impacting your company and sector, or to participate in BCTIA policy and advocacy efforts, email