Canada at a Crossroads: Cleantech coalition calls for immediate federal support

If Canada wants to compete globally, scientific research and experimental development (SR&ED) tax incentive has to be more than a tax form—it must be a growth engine. It must fuel innovation across all sectors and companies, private or public, and be a steady enough foundation to be bankable—even financeable.

The TMX Group and a coalition of sector leaders are urging the Government of Canada to move forward with four practical enhancements to the SR&ED program that have been developed collaboratively since the roundtables held in April 2024 and that were announced in December 2024.

These are common-sense updates that will strengthen the backbone of Canada’s innovation economy including it’s clean economy:

• Restore the eligibility of capital expenditures for both the deduction against income and the investment tax credit components of the SR&ED program.
• Extend the enhanced refundable credit to Canadian public corporations using the proposed Eligible Canadian Public Corporation framework;
• 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; and,
• 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.

Put together, these measures will give innovators the certainty to plan, financial institutions and investors the confidence to commit research and development (R&D) spending, and Canada the signal it needs to keep R&D at home, fostering growth, jobs, and stronger global leadership in innovation.

“This is especially critical for cleantech,” according to Bryan Watson, Managing Director of CleanTech North. “For years, private capital was limited, leaving public listing as one of the only viable paths. But going public came with a penalty: the loss of refundable tax credits. The proposed legislation addresses this inequity by answering a simple question: Why should a company’s source of capital determine the level of support it receives from the federal government?”

Signatories so far include:

• Bryan Watson, Managing Director, CleanTech North
• John McKenzie, CEO,TMX Group Ltd.
• Benjamin Bergen, President, Council of Canadian Innovators | Conseil canadien des innovateurs (CCI)
• Matthew Holmes, Executive Vice-President, International and Chief of Public Policy, Canadian Chamber of Commerce
• Elizabeth L., Managing Director, The InGenuity Group
• W H ROBERT MacBean, President & CFO, Advanced Bio-Material Technologies Corporation
• Andrew White, CEO, CHAR Technologies Ltd.
• Jeannette Wiltse, Chair, Canadian Venture Capital & Private Equity Association (CVCA)

To access the letter, click here.

Featured photo credit: Getty Images