Canada Federal 2022 Budget Update: Road to Economic Recovery

Canada Federal 2022 Budget Update


The past two years have been ever eventful with the COVID-19 pandemic and the event of the Russia-Ukraine war resulting in economic instability and turmoil. The Canada Federal 2022 Budget Update outlines federal and provincial initiatives aimed at addressing these economic issues. The plan outlined in the 2022 budget consists of three main pillars: 1. Investing in the people of Canada 2. Growing the economy through a green transition 3. Growing the economy through investing in productivity and innovation. We have outlined the significant changes and initiatives regarding the third pillar of investing in productivity and innovation and how the proposed changes initiatives can benefit your business.


The government will be examining the SR&ED process with the goal of innovating and simplifying it in the hopes of encouraging more R&D activities within Canada. The government will be looking to see if changes are necessary for eligibility criteria for SR&ED. Further, the government will look to use the tax system to encourage intellectual property creation and retention from R&D activities which could lead to the implementation of a patent box regime.

Investment Tax Credits

The government of Canada has proposed a new refundable investment tax credit for Carbon Capture, Utilization, and Storage (CCUS) starting in 2022 and ending in 2030. It is estimated that the investment tax credit will cost the government $2.6 billion over 5 years starting in 2022 with the expected annual cost to grow to about $1.5 billion from 2026 until 2030.

The refundable investment tax credit can be claimed by businesses who partake in eligible CCUS expenses.

The refundable tax credit can be claimed at various rates depending on the CCUS project:

  • 60% for the investment to capture CO2 in direct air capture projects;
  • 50% for the investment in equipment to capture CO2 in all other CCUS projects; and
  • 5% for investment in equipment for transportation, storage, and use.
  • The rates will be decreased by 50% beginning in 2031 until 2040 to incentivize earlier adoption of lower emission technologies


There are numerous new funding actions proposed by the Canadian government in the 2022 budget. We have outlined several of the key funding actions:

  • $8 billion to transform and decarbonize industry and invest in clean tech and batteries
  • $4 billion for the Canada Digital Adoption Program (CDAP)
  • $1.2 billion to support life sciences and bio-manufacturing in Canada
  • $1 billion to the Strategic Innovation Fund
  • $1.9 billion for National Trade Corridors Fund
  • $1.5 billion for regional development agencies
    • Jobs and Growth Fund
    • Canada Community Revitalization Fund
  • $1 billion for Universal Broadband Fund (UBF)
    • Total available through UBF now $2.75 billion
  • $1.2 billion to launch National Quantum Strategy, Pan-Canadian Genomics Strategy, and next phase of Pan-Canadian Artificial Intelligence Strategy
  • $1 billion for tourism sector


The Canadian government has announced support for the following grant initiatives:

  • $40.9 million across 5 years and $9.71 million ongoing to federal granting councils put towards scholarships and fellowships targeted at qualifying Black student researchers
  • $100 million across 6 years to federal granting councils to assist research conducted by post-secondary for the development of technology and crop varieties leading to net-zero emission agriculture
  • Canada student grants are being doubled until July 2023 (full-time students can receive up to $6,000 per year in non-repayable funding)
  • $2.7 billion across 10 years to fund for essential programs and services abiding needs of first nations
  • $458.5 million to Canada Mortgage and Housing Corporation to help low-income housing providers part of the low-income stream of the Canada Greener Homes Loan program with offering low-interest loans and grants
  • $38.3 million across 4 years and $12.7 million on-going to federal granting councils to appoint new international recruits for Canada Excellence Research Chairs within fields of science, technology, engineering, and mathematics

Innovation Initiatives

Productivity and Innovation are part of the 3 main pillars of the 2022 budget plan. The following initiatives are to be implemented in the plan.

Innovation and Investment Agency

An innovation and investment agency will proactively work with Canadian industries and businesses to help make the investments they need to innovate, grow, create jobs, and be more competitive. The proposed funding is $1 billion over 5 years starting in 2022. The final details on the operating budget are to be released later this year. The funding will depend on the feasibility of project, market potential of the technology and whether milestones are achieved.

Canada Growth Fund

The Canada Growth Fund is a new public investment vehicle operating at arms-length from the Federal government will be initially capitalized at $15 billion over the next 5 years.

The fund’s aim is to gain private sector investment to meet national economic policy goals that:

  • Reduce emissions and to progress Canada’s climate goals
  • Diversify economy and improve exports by investing in low-carbon industries and new technology across new and traditional sectors of Canada’s industrial base
  • Support restructuring of important supply chains in key areas such as the Natural Resources Sector, for Canada’s future
  • Additional details will be released in the 2022 fall economic and fiscal update
The National Research Council (NRC)

The NRC provides a network of research and technical facilities across Canada, supporting businesses, the government, and university collaborations.

The government will explore new ways to better integrate leading university researchers and business partners and to further modernize the NRC to better invent, innovate, and prosper. There is more information to come following establishment of the innovation and investment agency.

Green Technology

To make it easier for Canadian businesses to innovate and become global leaders, the government is focusing on taking significant steps to move the economy on a path to reach net-zero by 2050.

The government proposed $183.2 million in funding over 7 years starting in 2022-23 to support greener construction in housing and buildings. There is $7.1 million ongoing to the National Research Council for research and development on innovative construction materials and to revitalize national housing and building standards to encourage low-carbon construction solutions.

Canada Agricultural Partnership

The Canada Agricultural Partnership provides $600 million in funding to support agricultural innovation, sustainability, competitiveness, and market development. The federal, provincial, and territorial government will work throughout 2022 to renew the programs under the next agricultural policy framework beginning 2023.

Supporting Canada’s Innovation Clusters

As of December 2021, there has been over 415 approved projects, with 1,840 partners with over $1.9 billion in funding.

In the 2022 budget, the government proposed to provide $750 million in funding over 6 years starting in 2022-23 to support further growth and development of Canada’s Global Innovation Clusters. Funding to be allocated between 5 clusters on a competitive basis, the goal is to expand clusters national presence and to deepen their impact.

Innovation, Science and Economic Development Canada

The following includes initiatives to be provided by Innovation, Science and Economic Development Canada:

  • Combined with $500 million from existing funding, $1 billion over 6 years starting in 2024-25 dedicated to the Strategic Innovation Fund. Targeted to critical minerals projects, prioritizing: manufacturing, processing, and recycling applications
  • $45 million over 4 years starting 2022-23 to support projects that will strengthen Canada’s semiconductor industry
  • $47.8 million over 5 years starting 2023-24 and $20.1 million ongoing to launch a new national lab to market platform to help graduate students and researchers take their work to market
  • $2.4 million over 5 years starting 2022-23, and $600,000 ongoing to expand use of ExploreIP on Canada’s IP marketplace
Additional Innovation Initiatives
  • To help invest in new technology and capital projects, SMEs can expense up to $1.5 million of eligible investments starting 2022
  • The government will continue to work with partners to support revitalization of East Montreal through projects that promote innovation, development, and a green and inclusive transition.
  • The government intends on increasing investments in innovation and R&D at the scale required to make Canada a global leader
  • To help accelerate innovations in brain, The Public Health Agency of Canada proposes $30 million over 3 years starting 2022-23 for the Centre for Aging and Brain Health Innovation health and aging
  • The Strategic Innovation Fund will help the Canadian Critical Minerals Strategy, creating jobs, growing the economy and the critical minerals industry
Contact EVAMAX today to see how you can take advantage of the opportunities outlined in the 2022 Federal Budget!

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