Canadian Federal Budget 2024: New Business Grants, Tax Credits, and Loans 

In this blog, we delve into the diverse array of policies, programs, and financial commitments designed to bolster Canada’s economy, foster innovation, support sustainable growth, and enhance the well-being of Canadians from coast to coast. From significant investments in research and clean technology to targeted funding for workforce development and regional economic growth, Budget 2024 reflects a forward-thinking approach aimed at addressing key challenges while unlocking opportunities for prosperity and progress. 

With many Canadians facing economic uncertainty, rising costs, and housing problems, Budget 2024 comes in as a positive note to the Canadian population.  

“We have a plan to fix that. We have a plan to build a Canada that works better for you, where you can get ahead, where your hard work pays off, where you can buy a home—where you have a fair chance at a good middle-class life.”

Prime Minister Justin Trudeau

In this article, we focus exclusively on business funding takeaways from the Canadian Federal Budget 2024 to help businesses navigate through economic uncertainties and seize growth opportunities.  

Visit our Federal and Provincial Budget 2024 page to learn about key business funding takeaways for all budget releases.   

Boosting Canada’s Research, Innovation, and Productivity

Canada’s commitment to research, innovation, and productivity is unwavering. Recognizing the critical role played by skilled individuals and innovative ideas, the government aims to capitalize on these resources to maintain its position among the world’s leading economies. With a focus on fostering scientific discovery, supporting emerging sectors, and enhancing AI capabilities, Canada is poised to drive growth and productivity across various industries. 

Strengthening Canada’s AI Advantage 

Canada’s AI ecosystem stands out globally thanks to significant investments driving growth and innovation. To maintain and expand this advantage, Budget 2024 proposes a substantial increase in targeted AI support, totaling $2.4 billion. This includes: 

• AI Compute Access Fund and Sovereign Compute Strategy: Allocation of $2 billion over five years to facilitate access to computational power for Canadian researchers and businesses, fostering the development of Canadian-owned AI infrastructure. 
• Support for AI Start-ups: $200 million over five years to accelerate AI adoption in critical sectors and assist AI start-ups in bringing new technologies to market, with a focus on agriculture, clean technology, healthcare, and manufacturing. 
• National Research Council’s AI Assist Program: $100 million over five years to help small- and medium-sized businesses deploy new AI solutions, enhancing productivity nationwide. 
• Support for Workers Impacted by AI: $50 million over four years to provide skills training for workers in sectors potentially disrupted by AI, ensuring a smooth transition to the evolving economy. 

These investments aim to bolster Canada’s position as a global leader in AI, fostering collaboration and innovation across sectors. 

Safe and Responsible Use of AI 

While AI presents significant economic opportunities, responsible use is paramount. Budget 2024 proposes measures to ensure the safe development and deployment of AI including: 

• Establishment of AI Safety Institute of Canada: Allocation of $50 million over five years to ensure the safe development and deployment of AI, fostering collaboration with stakeholders and international partners. 
• Enhancement of AI and Data Commissioner Office: $5.1 million to equip the AI and Data Commissioner Office to enforce the proposed Artificial Intelligence and Data Act. 
• Global Leadership on AI Governance: $3.5 million to advance Canada’s leadership role within the Global Partnership on Artificial Intelligence, promoting responsible AI development and governance internationally. 

Using AI to Enhance Security 

AI’s potential extends to enhancing security systems, including air cargo screening. Budget 2024 proposes a Pre-Load Air Cargo Targeting Program, powered by AI, to screen 100% of air cargo bound for Canada, ensuring security and efficiency. 

Learn more about the Canadian federal governments commitment to developing Artificial Intelligence (AI) technologies within Canada.

Supporting Scientific Discovery and Innovation 

Enhancing Research Support 

Since 2016, the federal government has committed more than $16 billion to research, marking a significant investment in advancing knowledge and innovation across Canada. This funding has been instrumental in supporting various research endeavors, including critical initiatives facilitated by the federal granting councils—the Natural Sciences and Engineering Research Council (NSERC), the Canadian Institutes of Health Research (CIHR), and the Social Sciences and Humanities Research Council (SSHRC). 

The breadth of this research support has facilitated groundbreaking discoveries in a multitude of fields, ranging from climate change and health emergencies to artificial intelligence and psychological health. Key actions in Budget 2024 include the:  

• Increased Funding for Granting Councils: 
  • Allocation of $1.8 billion over five years, starting in 2024-25, with $748.3 million per year ongoing. 
  • Enhances core research grant funding for SSHRC, NSERC, and CIHR. 
• Creation of a Capstone Research Funding Organization: 
  • Establishment of a new organization to coordinate federal research funding efforts. 
  • Receives an investment of $26.9 million over five years, starting in 2024-25. 
  • Streamlines funding processes and fosters interdisciplinary collaborations. 
• Creation of an Advisory Council on Science and Innovation: 
  • Formation of a council comprising leaders from academia, industry, and the not-for-profit sector. 
  • Develops a national science and innovation strategy. 
  • Invests in Canada’s research landscape and drives innovation-led growth. 
• Modernization of Grant Management Systems: 
  • Investment of $26.9 million over five years, starting in 2024-25. 
  • Improves and harmonizes grant management systems. 
  • Enhances user experience for grant applicants and recipients. 
  • Implements modern technologies for streamlined administration. 
  • Promotes transparency, accountability, and compliance in research funding. 

At Mentor Works, A Ryan Company, we are well versed with a wide range of research and development funding programs. Explore our research and development funding directory and find a grant program to subsidize your innovation costs.  

Boosting R&D and Intellectual Property Retention 

Research and development are vital for driving productivity and growth in Canada. Budget 2024 proposes enhancements to the Scientific Research and Experimental Development (SR&ED) program and the creation of a patent box regime to encourage the development and retention of intellectual property in Canada. More on this can be found in our Tax Credit Updates section below.

World-Leading Research Infrastructure 

Investments in research infrastructure are essential for fostering breakthroughs in Canadian research and science. Budget 2024 proposes significant investments in facilities such as TRIUMF, CANARIE, Canadian Light Source, and others, advancing cutting-edge research across various fields. 

Investing in Homegrown Research Talent 

Supporting master’s, doctoral, and post-doctoral students and fellows is crucial for fostering research talent in Canada. Budget 2024 proposes increased funding to enhance scholarships and fellowships, along with dedicated support for Indigenous researchers. 

Investing in Innovation Ecosystems 

Advanced technology development is a highly competitive industry and there is a global race to attract talent and innovative businesses. Canada must compete to ensure its economy is at the forefront of global innovation. To fuel innovation, the federal government is taking on different initiatives in Budget 2024.  

Advancing the Agri-Business Industry  

To support the Canadian agricultural industry in its advancement, the government is committing $3.5 billion via the Sustainable Canadian Agricultural Partnership to enhance innovation, competitiveness, and resilience within the agriculture and agri-food sector. The dairy industry will also receive up to $333 million. 

Boosting Talent for Innovation 

To ensure Canada remains competitive in advanced technology development, Budget 2024 announces plans to develop a pilot initiative in partnership with Talent for Innovation Canada, focusing on attracting, training, and deploying top talent in key sectors. 

Advancing Space Research and Exploration 

Canada’s leadership in space research and exploration is reinforced through investments in initiatives such as the $8.6 million investment towards the Lunar Exploration Accelerator Program and the establishment of a new National Space Council. 

Accelerating Clean Tech Intellectual Property Creation and Retention 

Budget 2024 proposes funding to support clean tech businesses in creating and retaining intellectual property, contributing to the growth of Canada’s clean economy. 

These initiatives underscore Canada’s commitment to research, innovation, and productivity, positioning the country for sustained economic growth and global leadership in key industries. 

To support small and medium-sized businesses in leveraging their intellectual property rights, Budget 2024 proposes to provide $14.5 million over two years, starting in 2024-25, to Innovation, Science and Economic Development Canada for the Innovation Asset Collective. 

Canada’s Net-Zero Economic Plan: A Catalyst for Investment and Growth 

In the 21st century, a competitive economy is intrinsically tied to environmental sustainability. Last year, global net-zero economies attracted an impressive $2.4 trillion in investments. Canada is positioned at the forefront of this transformative movement and has unveiled an ambitious net-zero economic plan, earmarking a staggering $160 billion for strategic investments. Notably, this plan includes an unprecedented suite of major economic investment tax credits, totaling $93 billion by 2034-35. 

A New Electric Vehicle (EV) Supply Chain Investment Tax Credit 

The automotive industry is undergoing a significant transformation as electric vehicles (EVs) become more prevalent worldwide. Canada’s automotive sector must adapt by retooling assembly lines and establishing new factories to capitalize on the global shift toward EVs. Leveraging our world-class natural resources, skilled workforce, and favorable investment climate, Canada aims to position itself as a hub for the entire EV supply chain. This strategic initiative includes the introduction of a new 10% Electric Vehicle Supply Chain investment tax credit. 

• Applicability: The tax credit applies to property acquired and available for use on or after January 1, 2024. It covers buildings used in key segments of the EV supply chain. 
• Segments Covered: Electric vehicle assembly; electric vehicle battery production; and the cathode active material production. 
• Credit Reduction: The credit will be reduced to 5% for the years 2033 and 2034. After 2034, the credit will no longer be in effect. 
• Cost Estimate: The EV Supply Chain investment tax credit is projected to cost $80 million over five years, starting in 2024-25. An additional $1.02 billion will be allocated from 2029-30 to 2034-35. 

In summary, this tax credit aims to secure high-quality jobs for Canadian workers and solidify Canada’s leadership in the evolving EV industry. Read more about other Cleantech Investment Tax Credits below.

Clean Electricity Investment Tax Credit: Powering Canada’s Net-Zero Future 

As Canada’s economy grows, so does our electricity demand. By 2050, this demand is expected to double. To meet this increased need while maintaining a clean, reliable, and affordable grid, our electricity capacity must expand significantly—between 1.7 and 2.2 times the current levels. Investing in clean electricity today not only benefits the environment but also has tangible economic advantages: 

• Reduced Energy Costs: Investing in clean electricity will lead to a 12% reduction in Canadians’ monthly energy expenses. 
• Job Creation: The transition to clean electricity will create approximately 250,000 jobs by 2050. 

Canada Growth Fund  

The Canada Growth Fund is aimed at attracting private capital to invest in Canadian projects and businesses. With a substantial $15 billion allocation, this arm’s length public investment vehicle is led by Canada’s renowned public sector pension professionals. 

One of the primary focuses of the Canada Growth Fund is on investments in clean energy and clean technology, contributing to the development of a robust and sustainable economy while fostering job creation opportunities nationwide.  

Budget 2024 also reveals that the Canada Growth Fund is actively developing an expanded range of Carbon Contracts for Difference (CCfD) offerings tailored to different markets, considering their unique risks and opportunities. These offerings will include bespoke CCfDs and carbon offtake agreements, with a particular focus on provinces making substantial contributions to greenhouse gas emissions reductions. 

Clean Growth Hub  

The Clean Growth Hub serves as the federal government’s primary resource for information and guidance regarding federal funding and other forms of support for clean technology projects across Canada. With a direct impact on as many as 1,100 companies and organizations annually, ranging from burgeoning small businesses to established leaders in Canada’s clean technology sector, the Clean Growth Hub plays a pivotal role in advancing sustainable economic growth. 

Recognizing the importance of continued support for stakeholders in the clean technology sector, Budget 2024 proposes an allocation of $6.1 million over two years, commencing in 2024-25, for the Clean Growth Hub. This funding will enable the Clean Growth Hub to sustain its mission of aiding clean technology stakeholders in identifying and accessing relevant support and advice, thereby facilitating further growth and innovation in the sector. 

Supporting Canadian Small Businesses  

In a rapidly evolving global landscape, fostering innovation and economic growth is paramount for Canada’s prosperity. Budget 2024 unveils a strategic roadmap aimed at bolstering entrepreneurship, attracting investment, and empowering regions across the country. From venture capital initiatives to encouraging pension funds to invest domestically, and from boosting regional economic development to cutting red tape for innovation, these measures underscore Canada’s commitment to driving forward-thinking solutions and cultivating a resilient economy for all Canadians. 

Investing in Canadian Start-Ups: 

• The Venture Capital Catalyst Initiative (VCCI) strengthens Canada’s venture capital ecosystem by co-investing with the private market, nurturing globally recognized Canadian companies, and generating returns for private and public investors. 
• Since 2016, the government has invested $821 million through VCCI, supporting over 300 companies nationwide. 
• Budget 2024 proposes to allocate $200 million over two years, starting in 2026-27, to increase venture capital access for equity-deserving entrepreneurs. 
• This funding aims to invest in underserved communities and areas outside major metropolitan hubs, fostering inclusive growth. 
• The Minister of Transport will release a policy statement to attract capital, including pension funds, for investments in airport facilities. 

Boosting Regional Economic Growth: 

• Canada’s Regional Development Agencies support businesses and innovators to fuel economic growth and create middle-class jobs. 
• Budget 2024 proposes an additional $158.5 million over two years, starting in 2024-25, for the Regional Economic Growth through Innovation program. 
• This includes funding dedicated to housing innovation and builds on the $200 million for AI adoption. 

Cutting Red Tape to Boost Innovation: 

• The government plans to introduce amendments to the Red Tape Reduction Act to expand the use of regulatory sandboxes. 
• Regulatory sandboxes will create temporary rules to enable testing of products, services, or new regulatory approaches, fostering innovation and streamlining the regulatory system. 

Building a Strong Workforce  

As part of its commitment to fostering economic fairness across generations, the government provides avenues for all Canadians to access meaningful employment opportunities. This requires substantial investments in job creation, skills development, and labor law enhancement initiatives, aimed at bolstering workforce productivity and promoting inclusive economic growth. 

Investments in Skills Training 

• Labor Market Development Agreements (LMDAs) and Workforce Development Agreements (WDAs): With an annual investment of nearly $3 billion, these agreements enable provinces and territories to tailor training and employment supports to their unique labor market needs, benefiting over one million Canadians each year. 
• Union Training and Innovation Program: Since 2019-20, over $200 million has been allocated to expand this program, aiming to train more than 30,000 additional apprentices and journeypersons. 
• Sectoral Workforce Solutions Program: Launched under Budget 2021, this initiative received $250 million to support key sectors of the economy, including the construction sector, in addressing their workforce needs. 
• Upskilling for Industry Initiative: Also announced in Budget 2021, this program received $250 million to support over 15,000 workers in upgrading their skills. 
• Proposed Skills Training Initiatives in Budget 2024: 
  • $50 million over four years to provide skills training for workers in sectors disrupted by AI. 
  • $10 million over two years to train more early childhood educators, contributing to the expansion of affordable, high-quality childcare. 

Support for Apprentices 

• Canada Apprentice Loans: Since 2018-19 over 45,000 apprentices have been supported through interest-free loans, covering tuition, tools, equipment, living expenses, and forgone wages. 
• Apprenticeship Service: Launched to help first-year apprentices in construction and manufacturing Red Seal trades connect with opportunities at small and medium-sized employers. Budget 2024 proposes $90 million over two years to further support this service, particularly in the residential construction sector. 

Hiring & Training can be a costly process for businesses. Visit our list of Hiring & Training grant programs that can support your onboarding costs. 

Youth Entrepreneurship 

• Futurpreneur Canada: Supported by $161.5 million in federal funding, this organization has helped over 17,700 young entrepreneurs launch more than 13,900 businesses across the country, creating thousands of jobs. Budget 2024 proposes an additional $60 million over five years to further empower young entrepreneurs through Futurpreneur Canada’s programs and offerings. 

Review of Critical Port Operations 

• Labour Program Funding: Budget 2024 proposes $3.1 million over two years to enable the completion of the second phase of a review aimed at minimizing labor disputes and ensuring the stability of Canada’s supply chains. 

Canadian Tax Credit Announcements 

Changes to SR&ED Tax Credits: 

The 2024 Canadian budget places a strong emphasis on incentivizing business research and development (R&D) projects, with one of the largest changes being updates to the making changes to their largest single source of government funding, the Scientific Research and Experimental Development (SR&ED) tax credit program. The Federal budget 2024 is making the following changes to the program: 

• Modernization: With the SR&ED program being around since 1983, the program sees a round of larger updates every few years to better meet the modern needs of local businesses performing R&D. This modernization of the program is currently underway as part of two phases: 
• Consultations: The federal government has recently completed this phase by collecting feedback from SR&ED consultants and Canadian businesses performing R&D on how the program can be updated to better achieve its goal of incentivising Canadian business innovation. 
• Eligibility Changes: The second phase is currently underway and involves the government delving into the programs specific policy parameters and exploring expanding their eligibility criteria to include Canadian public companies and other potential innovative businesses. 
• Increased Funding: The budget 2024 proposes allocating $150 million per year over the next four years, totaling $600 million in total. This additional funding for the program would begin in Budget 2025-26 and be used to enhance the SR&ED program. Specific details on how this funding will be used will be determined through the ongoing consultations over the course of the next few months. Follow our weekly funding newsletter for any future program updates related to SR&ED. 

Get to know more about this tax credit by downloading our free SR&ED 101 Guide to determine whether your business projects are eligible for this R&D tax credit.

Introducing a New Tax Credits for Canadian Patents

The Canadian federal government is introducing a Patent Box Regime, which would provide a lower tax rate on income derived from Canadian patents. This tax credit program is in its beginning stages, with consultations on this topic concluding in April 2024, and the government is currently reviewing submissions to decide how they will create this future tax credit program. This new R&D tax credit will help incentivize Canadian innovation through the creation of new patents owned by local businesses. 

Cleantech Investment Tax Credits (ITC) 

To help the Canadian federal government hit their net-zero emissions goal by 2050, they are committed to implementing the following new cleantech tax credits by the end of 2024 to providing businesses with the certainty they need to invest in clean technologies and contribute to Canada’s net-zero goals. These six major economic investment tax credits represent $93 billion in federal incentives, and they’re aimed at attracting private investment in clean technologies. These include: 

• Carbon Capture, Utilization and Storage – This program prioritizes solutions along the CCUS value chain to enable broad deployment, low carbon hydrogen technologies across the entire value chain, and next-generation materials and products from natural gas.  
• Clean Technology Investment Tax Credit – Provides up to 30% of investments in eligible property acquired and available for use on or after March 28, 2023, and before 2034. For property that becomes available for use in 2034, this tax credit would be up to 15%. No tax credit would be available for property that becomes available for use after 2034.   
• Clean Hydrogen Investment – Provides up to 40% of investments in projects that produce hydrogen and become available for use on or after March 28, 2023, and before 2034. 
• Clean Technology Manufacturing Investment – This program provides a refundable tax credit of 30% of investments in eligible property to be used in clean technology manufacturing and critical mineral extraction and processing that is acquired and available for use in 2024 to 2031. This tax credit would reduce to 20% for 2032, 10% for 2033, and 5% for 2034. 
• Clean Electricity Investment Tax Credit – A refundable tax credit up to 15% of investments in projects that generate clean electricity, transmit electricity between provinces, and store electricity without the use of fossil fuels. 
• EV Supply Chains (New in Budget 2024) – As mentioned in the Net-Zero section above, the federal government has announced a new Investment Tax Credit specifically for the electric vehicle (EV) supply chain as we transition to having all Canadian consumer vehicle sales be electric, hybrid, or hydrogen powered by 2035. More information on this program can be found above. 

Find out how your business can stack Canadian government tax credits with their grant programs to maximize your funding potential by downloading our free Stacking Funding Guide PDF. 

 

New Tax Credits for Canadian Entrepreneurs 

The Federal government continues to foster Canadian innovation through entrepreneurship by introducing the Canadian Entrepreneurs’ Incentive. This tax credit initiative offers significant tax benefits to eligible individuals and businesses. Here are the key details of the program: 

• The program proposes to lower the inclusion rate to 33.3% on a lifetime maximum of $2 million in eligible capital gains. 
• Once fully implemented, entrepreneurs can expect a combined exemption of at least $3.25 million when divesting all or a portion of their business. 
• The program will feature a one-third inclusion rate, with the limit set to increase by $200,000 annually, commencing in 2025, until it hits the $2 million mark in 2034. 
• An additional incentive of $2 million will be extended to founding investors in certain sectors, provided they hold a minimum of 10% of shares in their business and the company has served as their primary employment for a minimum of five years. 

The “Canadian Entrepreneurs’ Incentive” is a significant development for Canadian entrepreneurs looking to reduce the risk of their innovative business ideas. This initiative underscores the government’s commitment to supporting entrepreneurship and is a clear indication of why Canadian entrepreneurs should take an active interest in this tax credit. 

Innovative Canadian Housing Construction Incentives 

Temporary Accelerated Capital Cost Allowance 

The Canadian federal government is ramping up the production of homes. Businesses in the construction sector can take advantage of the proposed temporary accelerated capital cost allowance for eligible new purpose-built rental projects. This funding proposed in Budget 2024 will enable construction businesses to deduct depreciation expenses faster and incentivize investment in housing construction.  

Support for Innovative Housing 

Funding is allocated to NGen Manufacturing Canada and Regional Development Agencies to support innovative housing solutions, such as modular homes, 3D printing, and mass timber construction. Businesses within the Canadian construction sector can take advantage of the funding programs that NGEN and the Regional Development Agencies will be putting together and releasing more information later.  

To hear about future funding updates related to the construction sector, be sure to subscribe to our weekly government funding newsletter. 

 

$5 Billion Indigenous Loan Guarantee Program 

The Federal Budget 2024 is allocating up to $5 billion in loan guarantees available to Indigenous communities to support their participation in natural resource and energy projects. This Indigenous funding program will help foster Canadian innovation and create a new wave of Indigenous cleantech. More information will be released on this program later and in the fall economic update. 

Federal Budget 2024 Summary

In conclusion, the Canadian Federal Budget 2024 is a comprehensive plan that aims to foster Canadian innovation, support local businesses, contribute to Canada’s net-zero emissions goal by 2050, advance artificial intelligence (AI) adoption, build a resilient workforce, and help strengthen our economy. The budget does this through various measures, including modernizing the SR&ED program, introducing new cleantech tax credits, providing training and wage subsidies, and providing funding for innovative housing solutions and Indigenous communities. 
 
To learn more about any of the Federal government funding programs announced in this budget, or any of the Canadian provincial budget 2024 funding program announcements, speak with a member of our Canadian government funding consultant team in a free business discovery meeting to find out what grant, loan, and tax credit programs your business is missing. 

Our expert team of consultants are ready to guide you through the application process for government grant, tax credit, wage subsidies, and more programs. These government funding programs are designed to support local businesses and making a real impact in your industry. Our tailored support ensures that your unique enterprise gets the attention it deserves.