Budget announcements from a grants & incentives perspective are valuable because they provide a forecast into what funding opportunities businesses and municipalities can plan for in the coming year. 

Federal Budget 2023 is expected to address challenges that may arise from a slowing global economy and elevated interest rates, while also presenting opportunities for Canada to build a clean economy and strengthen its supply chains. The budget aims to provide targeted inflation relief, stronger public health care, investments in building a clean economy, and a responsible fiscal plan to maintain the lowest deficit and net debt-to-GDP ratio in the G7.

Canadian businesses and municipalities should plan for a period of growth over the next year as the federal government commits to making strategic investments in key sectors and communities. With this in mind, it’s important to begin planning investments early to increase chances of project alignment with grant and incentive programs. Read on below for a summary of key funding program announcements found in the 2023 Canadian Federal Budget.

2023 Funding Highlights 

Environment

• 15% Tax Credit for Clean Electricity for building or refurbishing clean electricity investments including: solar, hydro, wave, nuclear, abated natural gas, stational electricity storage and transmission equipment. Additional only to the Atlantic Investment Tax Credit. Program to end in 2034. Total cost of $6.3B over next 4 years; $19.4B from 2028 to 2035.

• Canada Infrastructure Bank to invest an additional $10B in green infrastructure programming for a total of $20B for clean energy and infrastructure projects.

• New Investment Tax Credit for Clean Technology Manufacturing of 30% for the cost of investments in new machinery and equipment used to manufacture or process clean technologies or recycle key minerals (including critical minerals, renewable energy, nuclear, electrical storage, zero emission vehicles, and EV batteries). Cost of $4.5B over five years and additional $6.6B from 2028 to 2035 with a phase out of the credit from 2032 to 2034.

• Details on the Tax Credit for Clean Hydrogen (previously announced) released. Credit to be set from 15% to 40% based on intensity tiers of eligible projects. 15% for equipment to convert hydrogen to ammonia. Cost of $5.6B over next 5 years and additional $12.B from 2028 to 2035.

• $500M over 10 years for the Strategic Innovation Fund to support the development and application of clean technologies. The program will direct $1.5B of existing funds to projects in clean technologies, critical minerals and industrial transformation.

• Expansion of eligibility for the Clean Technology Investment Tax Credit, announced in 2022 to support businesses adopting clean technologies, to include geothermal systems and extend the phase out of the program for two additional years commencing in 2034.

• Extend reduced corporate tax rates for Zero-Emission Technology manufacturers of 4.5% for small business and 7.5% for other businesses by another 3 years to 2034.

• Additional details of the Carbon Capture, Utilization and Storage Investment Tax Credit released with additional funding of $520M over 5 years.

• $3B over next 13 years for funding of the Smart Renewables and Electrification Pathways Program (critical regional priorities and Indigenous-led projects); Smart Grid Program (support of electricity grid innovation); and to create new investments for Canada’s offshore wind potential.

• Canada Growth Fund to be managed by Public Sector Pension Investment Board.

• Consultations to explore opportunities to promote growth of Biofuels.

• $48.1M over five years to identify high-risk flood areas and implement a modernized Disaster Financial Assistance Arrangement program to incentivize mitigation efforts.

Business Grants and Tax Incentives

•  Continuing consultation announced in Budget 2022 of the review of the Scientific Research and Experimental Tax Incentive Program (SR&ED).

•  $108.6M over next 3 years for the College and Community Innovation Program for businesses to access college R&D facilities they need.

•  $50M for renewal of funding for Regional Economic Growth Through Innovation Program (through the Canada Regional Development Agencies).

•  $44M for the Inclusive Diversification and Economic Advantage in the North Program (through CanNor).

• $126M for CFIA Market Access and Food Safety Programming.

• $40M over two years for the Canada Media Fund for funding underrepresented voices and French language screen content.

Municipal Grants 

• $10M over 2 years starting in 2024-25 for the Enabling Accessibility Fund.

• Report to be published on the success of Canada Infrastructure Program (ICIP) over the past five years, ending March 31, 2023. The government will be reviewing infrastructure needs for future programming to be updated later this year including next steps on permanent funding for transit.

• $49.5M over 5 years for the Communities at Risk: Security Infrastructure Program.

•  Reallocation of funding from National Co-Investment Fund’s repair stream to a new construction stream to boost new affordable home construction.

•  Additional $4B over 7 years starting in 2024-25 for the Urban, Rural and Northern Indigenous Housing Strategy.

• Canada Infrastructure Bank to provide loans to Indigenous communities to support the purchase of equity stakes in infrastructure projects the Bank is investing in.

• $25M in 2024-25 for the Supporting Black Canadian Communities Initiative.

• $14M over 2 years to support the Building Communities Through Arts and Heritage Program

• A new Tourism Growth Strategy to be released that will include $108M over 3 years to the Regional Development Agencies to support local projects and events.

• $20M over 4 years for the Pathways to Safe Indigenous Communities Initiative.

Agriculture

• $333M over 10 years for a new Dairy Innovation Fund for Agriculture and Agri-Food Canada to support investments in R&D of new products based on a growing surplus of solids-non-fat, market development of these products, and processing capacity.

• $34.5M over 3 years for the On-Farm Climate Action Fund for Eastern Canadian farmers to support optimal use and reduction fertilizer in order to diversify away from Russian fertilizers.

• $13M in 2023-24 to increase interest-free loans under the Advance Payments Program.

Training/Labour

• To be eligible for the Clean Technology and Clean Hydrogen Investment Tax Credits, requirements will be set for workers to be paid prevailing wages, and at least 10% of tradeperson hours will be required to be performed by registered apprentices in Red Seal trades.

• $197M for continued support in 2023-24 of the Student Work Placement Program.

Other

• One-time $2.5B Grocery Rebate for low to modest income Canadians to be delivered through the GST Credit ranging from $234 to $467 for families.

• Changes to predatory lending regulations: reduction in the criminal rate of interest from 47 per cent to 35 per cent and pay day loans limit to $14 per $100 borrowed.

• Lowering credit card transaction fees for small businesses from commitments made by Visa and Mastercard.

• $13B over 5 years to implement the Canadian Dental Plan for dental coverage for uninsured Canadians with incomes of less than $90k.

• $373.7M over 7 years for additional support for the Action Plan for the Official Languages including $117M for prosperity of official language minority communities.

• $49.5M over 5 years for the Communities at Risk: Security Infrastructure Program.