From R&D tax incentives to government procurement policies, Canada’s next government, whether Liberal or Conservative, will need to address several key concerns.
As Canada heads into the 2025 election year, the tech industry is making its priorities known. Amidst growing tensions related to the U.S.-Canada trade dynamics and rising economic challenges, the Canadian technology sector is calling for significant changes to help foster growth, innovation, and competitiveness.
1. Overhaul R&D Tax Incentives for Startups and Scale-ups
One of the most pressing issues for Canada’s tech community is the current Scientific Research and Experimental Development (SR&ED) tax incentive program. While this program has been the cornerstone of Canada’s innovation funding, it has faced criticism for being poorly targeted and inefficient.
- What Tech Leaders Want: The Council of Canadian Innovators (CCI) wants the SR&ED program to expand beyond just R&D and include commercialization activities, such as patenting. They’re also calling for simplified application processes and the scrapping of ineffective initiatives like superclusters.
- Conservative vs. Liberal Approach: Both the Liberal and Conservative parties have previously indicated plans to update the SR&ED program, but neither has explicitly committed to drastic reforms yet. Conservative Leader Pierre Poilievre has hinted at moving away from direct subsidies in favor of tax credits to stimulate R&D.
2. ‘Buy Canadian’ – Supporting Homegrown Tech Through Federal Procurement
Canadian tech firms have long struggled to secure government contracts, often competing against foreign companies in areas like cybersecurity and military tools. The CCI has been vocal in advocating for a Buy Canadian tech strategy that supports small and medium-sized enterprises (SMEs) by setting specific procurement targets for them.
- What Tech Leaders Want: A national strategy to ensure that Canadian innovation is prioritized in federal government purchases, especially for emerging technologies such as artificial intelligence (AI), cybersecurity, and quantum computing.
- Liberal and Conservative Plans: Both parties have promised measures to support domestic innovation. The Liberals have set a target of one percent of federal procurement from innovative firms. However, Poilievre’s Conservatives have committed to reducing reliance on external consultants, making it unclear how they will directly address this issue.
3. Deregulation and Open Banking: The Push for Industry-Friendly Policies
Tech executives are pushing for a deregulation agenda, particularly within financial services, to allow greater competition and innovation.
- What Tech Leaders Want: Key initiatives like open banking, which would allow Canadians to easily share their financial data between banks and fintech companies, are top of the list. Industry leaders such as Fintechs Canada have called for Ottawa to implement open banking by 2026, extending these policies to sectors like healthcare and telecommunications.
- Poilievre’s Vision: The Conservative Party has pledged to cut 25% of all red tape within two years and implement a law requiring departments to eliminate two regulations for every new one they introduce. This aligns with the broader push to ease restrictions and streamline processes.
4. Focus on Innovation and Future Growth Sectors: AI, Quantum Computing, and Robotics
With global competition intensifying, Canadian tech executives are calling for increased government investment in AI, quantum computing, and other next-generation technologies that will drive future economic growth.
- What Tech Leaders Want: AI-first policies, which encourage the federal government to lead with AI-powered solutions in public services, are a top priority. Additionally, the Canadian Venture and Private Equity Association (CVCA) advocates for a tax credit for investments in high-growth sectors such as AI and robotics.
- Poilievre’s and Carney’s Stance: Both leaders have recognized the importance of these sectors, with Poilievre pledging significant investments in AI for military use and cybersecurity tools. Meanwhile, Mark Carney’s Liberals have also committed to advancing AI and quantum computing technologies in the context of national security.
5. Tax Cuts and Capital Gains: How to Support Startups
The Canadian tech industry has been vocal in its opposition to tax increases, particularly on capital gains, which directly affects investment in startups and scale-ups.
- What Tech Leaders Want: The CVCA wants a capital gains tax reduction for investments in Canadian-based startups, suggesting a 25% inclusion rate for reinvestments in local tech firms. This would help free up funds for scaling businesses and attract more investment.
- Carney’s Move: As one of his first acts as Prime Minister, Carney scrapped a capital gains tax increase, but the industry is calling for more permanent tax relief measures.
Conclusion: The Future of Canada’s Tech Industry Post-Election
The 2025 election is crucial for shaping the future of Canada’s tech industry. Whether the Liberals or Conservatives take the lead, the next government will need to address the pressing concerns of the tech community, which include:
- Expanding and improving the SR&ED tax program.
- Supporting domestic innovation through procurement and deregulation.
- Driving investment in emerging technologies such as AI, quantum computing, and robotics.
Canada’s tech sector is a driving force for economic growth, and the upcoming election could be a pivotal moment in ensuring that it continues to thrive on the global stage. Tech leaders are waiting to see which party’s policies will best support their ambitions for growth and innovation in the years ahead.
Stay tuned to Maple News Wire for more updates on Canada’s tech industry, election coverage, and business insights as we approach a defining election year!
