March 30, 2012 – Finance Minister Jim Flaherty delivered Canada’s 2012 federal budget yesterday, entitled “Jobs, Growth, and Long Term Prosperity.” Much-anticipated by the tech community, the federal budget places a high priority on productivity, job creation, and support for entrepreneurship and business-led research & development.

Most notably for Waterloo Region tech companies, Budget 2012 contains important measures designed to address their key challenges – access to capital, and access to top talent.

Access to Capital

    • $500 Million for venture capital, specifically:
      • $400 million to help increase private sector investments in early-stage risk capital, and to support the creation of large-scale venture capital funds led by the private sector; and,


Access to Talent

The budget signals a number of improvements regarding hiring, training and improving access to skilled immigrants including:

    • Providing an additional $50 million over two years to the Youth Employment Strategy to assist more young people in gaining tangible skills and experience
    • Improving labour market opportunities for Canadians with disabilities by investing $30 million over three years in the Opportunities Fund and by creating a panel on labour market opportunities for persons with disabilities
      • Realigning the Temporary Foreign Worker Program to better meet labour market demands
      • Supporting further improvements to foreign credential recognition and identifying the next set of target occupations beyond 2012
      • Moving to an increasingly fast and flexible immigration system where priority focus is on meeting Canada’s labour market needs
      • Returning applications and fees to certain federal skilled worker applicants who have been waiting for processing to be completed


SR&ED

Of particular note, the budget includes commentary on the recommendations made last fall by the Jenkins panel review of R&D, particularly in relation to the Scientific Research & Experimental Development tax credit program.

Relative to the changes recommended in the Jenkins Report, the proposed changes to the SR&ED rules in the budget are incremental, rather than sweeping.

The government calls for the streamlining and simplification of the SR&ED tax incentive program by removing capital from the expenditure base, implementing design improvements and modest rate reductions, and enhancing predictability through administrative improvements. These changes will come into effect January 1, 2013.