The Federal budget has finally been published, and I put together a summary of the main changes in government funding for businesses you need to know. We have also created the AI Agent for the 2025 Federal Budget. You can ask any questions related to the document in plain language, and it will provide answers and identify relevant government programs.
1. SR&ED Program Reform
For years, the Scientific Research and Experimental Development (SR&ED) program has been a cornerstone of innovation funding, but many businesses found the process uncertain. Budget 2025 announces “transformational reforms” to the program’s administration, aimed at providing predictability and rewarding innovators.
Key Administrative Changes:
- Elective Pre-Claim Approval: This is the biggest news. Businesses will be able to apply for an up-front technical approval of their SR&ED projects before work begins. This provides tremendous certainty and de-risks your innovation investment.
- Faster Processing: For claims submitted through this new pre-approval process, the review processing time will be cut in half to 90 days (from 180 days).
- AI-Driven Reviews: The CRA will increase its use of artificial intelligence to risk-assess claims. This means lower-risk claims should be processed much faster, freeing up resources.
- Reduced Burden: The government is committing to streamlining the review process and reducing “burdensome information requirements”.
Key Funding Enhancements:
On top of the administrative reforms, the budget also proposes to increase the annual expenditure limit for the enhanced 35% refundable tax credit. It also confirms other positive changes, including restoring the eligibility of capital expenditures.
What this means for you: The new pre-approval process is a monumental shift. It moves SR&ED from a “file-and-wait” liability to a predictable strategic asset.
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2. New Capital Investment Tax Incentives
The centrepiece of the budget’s productivity plan is the new “Productivity Super-Deduction”. This is a set of enhanced tax incentives allowing your business to write off a larger share of new capital investments immediately. This new deduction includes:
- Immediate Expensing for Manufacturing & Processing Buildings: A 100% first-year write-off for eligible new-builds acquired after Budget Day and used before 2030.
- Immediate Expensing for Key Assets: This incentive is confirmed for manufacturing and processing machinery, clean energy equipment, zero-emission vehicles, and productivity-enhancing assets like patents, data network infrastructure, and computers.
- Accelerated Investment Incentive: The budget also confirms the reinstatement of this broader incentive.
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3. Hiring & Training Support Confirmed
Hiring Youth: The budget confirms continued support for key youth hiring programs. This is excellent news for securing wage subsidies for your upcoming co-op, intern, and summer positions through:
- Canada Summer Jobs (CSJ)
- Youth Employment and Skills Strategy (YESS)
Upskilling Your Team: The budget includes a major commitment to Labour Market Development Agreements (LMDAs) with the provinces and territories. This is the federal funding that powers the most popular provincial training grants. This commitment secures the future for at least the next three years for programs like:
- Canada-Ontario Job Grant (COJG) in Ontario
- Canada-Alberta Job Grant (CAJG) in Alberta
- B.C. Employer Training Grant (BCETG) in British Columbia
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4. New Opportunities in the Clean Economy & Critical Minerals
The clean economy remains a top priority, with key tax credits being enhanced:
- Carbon Capture (CCUS) Tax Credit: The full credit rates are being extended by five years.
- Clean Technology Manufacturing Tax Credit: Eligibility is expanded to include more critical minerals like antimony, gallium, and indium.
- Critical Mineral Exploration Tax Credit (CMETC): Eligibility is also expanded to include 12 additional minerals, such as bismuth, chromium, and tin.
The budget also introduces a new Critical Minerals Sovereign Fund for strategic equity and loan guarantees and a First and Last Mile Fund for related infrastructure projects.
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5. A New “Buy Canadian” Strategy
The government is launching a new “Buy Canadian Policy”. This moves federal procurement from “best efforts” to a “clear obligation” to buy from Canadian suppliers where possible.
This is anchored by a new Defence Industrial Strategy and a Small and Medium Business Procurement Program. This signals a significant new opportunity for Canadian suppliers to win federal contracts.
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6. Other Notable Funding Changes
- Venture Capital: A new Venture and Growth Capital Catalyst Initiative will be launched by the BDC to invest in the fund-of-funds ecosystem.
- Export Support: The budget enhances the CanExport program and creates a new SME Export Readiness Initiative.
- Intellectual Property: Support for Elevate IP, the Innovation Asset Collective, and the IP Assist Program has been renewed or extended.
- Agriculture & Food: The budget includes a new Biofuels Production Incentive and enhances the AgriMarketing Program and AgriStability.
- Tariff-Affected Sectors: A new Strategic Response Fund and Regional Tariff Response Initiative are being created to help firms impacted by tariffs.
What to Do Next
Need help with the government funding programs but don’t know where to start or how to prepare an application?
Fill out the Eligibility Check form at https://www.fairgrantwriting.
