2024 Fall Economic Statement: Boosting innovation to create good jobs, growth and prosperity
News release
December 13, 2024 - Toronto, Ontario - Department of Finance Canada
Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, alongside the Minister of Export Promotion, International Trade and Economic Development, Mary Ng, announced the 2024 Fall Economic Statement will unlock billions in new capital and include significant new incentives to help businesses grow, innovate, and create good jobs.
First, the 2024 Fall Economic Statement will include significant, historic reforms that, through existing and new support, will deliver $26 billion in tax incentives for Canadian businesses. This will be done through a bold reform and a significant enhancement of the Scientific Research and Experimental Development (SR&ED) tax incentive program, which is already a proven cornerstone of Canada’s innovation strategy and currently supports over 22,000 businesses in Canada. The 2024 Fall Economic Statement is making this tax incentive more generous, particularly for high-growth potential firms. Specifically, the government is proposing to:
- Increase the annual expenditure limit on which Canadian-controlled private corporations are entitled to earn an enhanced 35 per cent investment tax credit, from $3 million to $4.5 million;
- Increase the prior-year taxable capital phase-out thresholds for the enhanced credit from $10 million and $50 million to $15 million and $75 million, respectively;
- Extend the enhanced refundable credit to Canadian public corporations; and,
- Restore the eligibility of capital expenditures for both the deduction against income and the investment tax credit components of the SR&ED program.
Second, the government has a plan to unlock billions in private sector and pension fund investment to boost growth and create good jobs. The 2024 Fall Economic Statement includes a set of proposals that create a more attractive investment environment for pension funds to invest at home, in Canada. This plan will unlock investment opportunities by removing investment barriers that currently hold pension funds back; crowd in private capital; and secure Canada’s AI advantage by attracting billions to build AI data centres. Informed by the work of the former Governor of the Bank of Canada, Stephen Poloz, the government is proposing to:
- Remove the 30 per cent rule that currently restricts Canadian pension funds from owning more than 30 per cent of the voting shares of a Canadian entity;
- Crowd in private venture capital by launching a fourth round of the Venture Capital Catalyst Initiative with $1 billion in funding and more enticing terms for pension funds and other institutional investors;
- Bolster access to capital for mid-cap companies by providing up to an aggregate of $1 billion in concessional financing. These investments will be equal to 25 per cent of net new private investments;
- Secure Canada’s AI advantage by developing a program that would provide up to $45 billion in aggregate loan and equity investments for AI data centre projects in which Canadian pension funds are significant investors; and,
- Attract investment for better airports by working with airports and pension funds to incentivize development on airport lands, including by exploring potential changes to airport authority ground leases.
The government is making significant reforms to ensure Canadian innovators have the right incentives to discover the next scientific breakthroughs here in Canada, and facilitate domestic pension fund investment in Canada, growing our economy and boosting innovation, while generating returns that will strengthen the robust retirement incomes of Canadians. These are just some of the measures in the 2024 Fall Economic Statement that will boost innovation, enhance productivity, and drive economic growth to build a more prosperous future.
Quotes
“In the face of external challenges, Canada needs to invest more in our own research and development, which is why we are expanding our SR&ED program and focusing more support on Canada’s innovators and start-ups. Canada is the world’s intellectual leader in AI, a dominant emerging technology. We are determined to use this intellectual edge to secure a national economic competitive advantage. At a time of rising economic nationalism, the fight for capital has never been more fierce. Canada needs to fight harder than ever for capital, including facilitating and supporting the investment of Canadian capital here at home. This is key to the future prosperity of all Canadians.”
- The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance
Quick facts
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The 2024 Fall Economic Statement will be released by the Deputy Prime Minister and Minister of Finance on Monday, December 16, 2024.
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The SR&ED tax incentive program currently supports the research and development activities of over 22,000 businesses operating in Canada. About 75 per cent of SR&ED tax credits are claimed by Canadian-controlled businesses.
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The current structure of SR&ED amounts to about $4 billion in tax incentives annually, with the reforms being introduced coming at an additional cost of approximately $1.9 billion over the next six years.
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Over the past decade, Canada’s venture capital (VC) ecosystem has grown significantly from $1.9 billion in 2013 to $6.9 billion in 2023, across 660 deals.
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Canada ranks in the top five countries globally in terms of VC investment as a percentage of GDP, according to the Organisation for Economic Co-operation and Development.
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Canadian pension funds hold over $3 trillion in assets, which are invested both at home and abroad to provide secure retirement income for plan members and retirees.
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Canadian pension funds rely on their strong governance practices and diversified portfolios to deliver Canadians’ pensions, with assets including public and private equity, infrastructure, real estate, and bonds.
Related products
Associated links
- Scientific Research and Experimental Development (SR&ED) tax incentives
- Venture Capital Catalyst Initiative
- December 9, 2024: Government of Canada to release the 2024 Fall Economic Statement on December 16, 2024
- Budget 2024: Boosting R&D and Intellectual Property Retention
- Budget 2024: Encouraging Pension Funds to Invest in Canada
Contacts
Media may contact:
Katherine Cuplinskas
Deputy Director of Communications
Office of the Deputy Prime Minister and Minister of Finance
Katherine.Cuplinskas@fin.gc.ca
Media Relations
Department of Finance Canada
mediare@fin.gc.ca
613-369-4000
General enquiries:
Phone: 1-833-712-2292
TTY: 613-369-3230
E-mail: financepublic-financepublique@fin.gc.ca
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