Building an economy with good-paying jobs that helps Canadians—especially Millennials and Gen Z—get ahead requires enabling entrepreneurs to increase productivity and boost innovation. To do this, in Budget 2024, the federal government is taking action to help entrepreneurs scale-up their ideas and seize the opportunities of the global economy to create good jobs.
Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance; the Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry; and, the Honourable Anita Anand, President of the Treasury Board, highlighted Budget 2024 investments in Canadian entrepreneurs and start-ups to build an economy where every generation can get ahead. Budget 2024 is making strategic investments in innovation, research, and support for entrepreneurs, including:
- The new Canadian Entrepreneurs’ Incentive designed to encourage innovative entrepreneurs in research and start-up phases to scale up their businesses, especially in the technology and manufacturing sectors. This incentive will reduce the inclusion rate to 33.3 per cent on a lifetime maximum of $2 million in eligible capital gains, resulting in entrepreneurs paying less tax on up to $6.25 million in capital gains.
- A new Accelerated Capital Cost Allowance for innovation-enabling and productivity-enhancing assets, such as computers and data network infrastructure. This means that it will cost businesses less to invest in cutting-edge technologies that can make their workforce more productive.
- Using regulatory sandboxes to cut the red tape that holds back innovation. By amending the Red Tape Reduction Act to offer exemptions to existing legislation and regulations, and reforming regulations to adapt to modern business realities, we can accelerate innovation and unlock the full potential of Canadian innovators.
- Investing in Canadian Start-ups through the Venture Capital Catalyst Initiative with $200 million over two years, to increase access to venture capital for equity-deserving entrepreneurs, and to invest in underserved communities and outside key metropolitan hubs.
- Enhancing Federal Research Support, with nearly $5 billion for investments in modern, high-quality research facilities and infrastructure, research grants, and post-secondary education, which are essential for breakthroughs in Canadian research and science. This includes $2.6 billion for core research grants and to foster homegrown, top-tier research talent by streamlining and enhancing scholarships and fellowships through Canada’s research granting councils.
The Canadian economy is creating new, high-paying jobs, in high-growth sectors, like clean tech, clean electricity, and scientific research and development. Budget 2024 will further this momentum by making strategic investments that create opportunities for workers today—driving productivity and economic growth for generations to come.
Quotes
“Fairness for every generation requires building an economy that fosters homegrown research talent, and encourages our brightest minds to innovate. We’re boosting research funding, enhancing scholarships and fellowships, and encouraging entrepreneurs to scale-up, all to create good jobs and unlock the middle class for every generation.”
The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance
“Our government is providing entrepreneurs and business the tools they need to accelerate innovation across the country. Budget initiatives such as the Canadian Entrepreneurs Incentive and the Accelerated Capital Cost Allowance are key to unlocking Canada’s long-term prosperity and promoting sustainable innovation.”
The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry
“Canadian businesses are the backbone of our economy and our government is using every tool at its disposal to help them drive economic growth—including reducing red tape through regulatory sandboxes. This will enable innovation by offering limited exemptions to existing legislation and regulations, streamlining the regulatory system, and reforming regulations to meet modern business realities. Business just wants to do business, and we will continue to reduce red tape while growing our economy.”
The Honourable Anita Anand, President of the Treasury Board
Quick Facts
- In Budget 2024, the government is delivering fairness for every generation with a housing plan that includes nearly 4 million new homes, transformative expansions to Canada’s social safety net to make life cost less and ensure Canadians get the care they need, and investments to create good jobs and economic growth. The government’s plan for tax fairness makes these investments in younger generations possible by increasing capital gains taxes on 0.13 per cent of Canadians to generate $19.4 billion in new revenue over five years.
- Budget 2024 invests to make it easier for talent to access research opportunities, for new businesses to start-up, and for existing businesses to grow, with new proposed measures, including:
- A Lifetime Capital Gains Exemption Increase from the current amount of $1,016,836 in capital gains tax-free on the sale of small business shares and farming and fishing property up to $1.25 million, effective June 25, 2024. The Lifetime Capital Gains Exemption will continue to be indexed to inflation thereafter. In 2025, Canadians with eligible capital gains of below $2.25 million will be better off under these changes.
- A new Canadian Entrepreneurs’ Incentive to reduce the inclusion rate to 33.3 per cent on a lifetime maximum of $2 million in eligible capital gains. This additional $2 million incentive will be available to founding investors in certain sectors and where the company has been their principal employment for at least five years. When this incentive is fully rolled out, entrepreneurs will have a combined total and partial exemption of at least $3.25 million when selling all or part of a business—encouraging innovators to keep innovating in Canada. The new Canadian Entrepreneurs’ Incentive will mean entrepreneurs will be better off when earning capital gains of up to $6.25 million, such as from selling their business.
- Modernizing the Scientific Research and Experimental Development tax incentives and further capitalizing the program with $600 million over four years, and $150 million per year ongoing, to boost research and innovation.
- Enhanced federal research support of $2.6 billion includes:
- $1.8 billion in core research grant funding for a 30 per cent increase over five years of Canada’s core research grant programs that support faculty-led research projects. It will indirectly support thousands of graduate students and post-doctoral fellows with their research, including their work on climate action, health emergencies, artificial intelligence, and psychological health.
- $825 million over five years to the granting councils to increase the annual value of master’s and doctoral students’ scholarships to $27,000 and $40,000, respectively, and post-doctoral fellowships to $70,000. To make it easier for students and fellows to access support, the enhanced suite of scholarships and fellowship programs will be streamlined into one talent program. This new program will also increase the number of graduate students and post-doctoral fellows benefitting from research scholarships and fellowships by approximately 1,720 each year.
- To provide better co-ordination across the federally funded research ecosystem, we will bring together our three research funding organizations within a single new capstone research funding organization. The granting councils will continue to exist within this new organization.
- Budget 2024 also includes a $2.4 billion package of measures to accelerate job growth in Canada’s AI sector, boost productivity by helping researchers and businesses develop and adopt AI, and ensure this is done responsibly.
- Budget 2024 investments in Canadian research build on existing federal support, including:
- The Strategic Science Fund, which announced the results of its first competition on May 26, 2024, providing up to $858.7 million in support to 24 third-party science and research organizations starting in 2024-25.
- Canada recently concluded negotiations to be an associate member of Horizon Europe, which would enable Canadians to access a broader range of research opportunities under the European program starting this year.
- The steady increase in federal funding for extramural and intramural science and technology by the government, which was 44 per cent higher in 2023 relative to 2015.