Canada’s Thriving Economy Meets New-Age Challenges
The aggressive use of incentive tools has provided meaningful opportunities for Canadian-based businesses to offset costs associated with growth.
Leslie Wagner, Director of Project Management and Development, Ginovus (Location Canada 2013)
(page 2 of 2)
Nova Scotia is battling a work force decline expected to reduce its available work force by 20,000 by 2014 (mostly due to retirees). Over the last 20 years, this province has experienced less economic growth than any other province in Canada. Nova Scotia has many economic development incentives available, and a major new program was recently announced. The Nova Scotia Jobs Here Program, under the auspices of the Productivity Investment Program, provides incentives for businesses to be more productive, innovative, and competitive. The Jobs Here Program is aimed at three main objectives for growing the necessary work force to support economic growth in the province:
- 1. Learning the right skills
- 2. Growing the economy through innovation
- 3. Helping businesses compete on a more global level
Business incentives available under the Productivity Investment Program include:
- Payroll Rebate — Payroll rebates are available to companies that are locating or expanding in the province. The payroll rebate is a return of a company’s eligible gross payroll (withholdings). The amount is dependent upon on the economic benefit generated to the province and is generally paid out annually over a term of five years or less.
- Workplace Innovation and Productivity Skills Incentive —
This job training incentive provides funding to companies to encourage investment in skills development and certification, as well as to help companies adapt to new technologies and processes, improve productivity, and strengthen global competitiveness.
- Research and Development Tax Credit — This program provides companies investing in R&D up to a 35 percent credit on eligible investment.
Ontario promotes its competitive work force as a differentiator and engine for business growth. Sixty-four percent of adults in the Ontario province have completed postsecondary education. Ontario’s combined federal-provincial corporate income tax rate of 26.5 percent is lower than the average of G-8 and G-20 countries and lower than the average federal-state corporate income tax rate in the U.S.
Ontario offers incentive programs to support its economic development efforts to both existing businesses and communities.
The Eastern Ontario Development Fund (EODF) is a discretionary fund designed to support regional economic development efforts by creating jobs, attracting investment, and promoting innovation. The funding stream is available for established businesses that invest in excess of $10 million and create 50 or more jobs.
The Southwestern Ontario Development Fund (SWODF) is a discretionary fund that supports regional economic development by creating jobs, attracting private-sector investment, and promoting innovation, collaboration, and cluster development in southwestern Ontario.
The Strategic Jobs Investment Fund (SJIF) is a discretionary grant and loan program designed to support leading-edge investments and jobs in Ontario focused on clean/green technologies, financial services, informational and communication technology, and life sciences. In order to qualify for funding, a company must meet minimum project threshold requirements.
Prince Edward Island
With significant focus on innovation, Prince Edward Island’s economic development efforts are highly innovative.
The Innovation PEI initiative is focused on advancing economic development by investing in people, innovation, and infrastructure. Key sectors that have displayed high potential for economic growth within the province are being targeted, including aerospace, bioscience, information technology, financial services, and renewable energy. Incentive tools are available to businesses to help them attract and expand industry including:
- Innovation and Development Labor Rebate — A refundable wage rebate of 37.5 percent is available to projects in support of the development and/or commercialization of new products, processes, and services.
- Specialized Labor Tax Rebate — This is a lower labor tax rate used to hire and recruit key leadership personnel in the management and technical specialist areas for companies establishing operations where knowledge and skill is not yet available in the local labor market.
Tax holidays for targeted industries are available, as are programs based on capital investment and performance-based job creation.
Quebec’s ministries of Finance, Tourism, and Economic Development have recently merged to form the new Ministry of Finance and the Economy (MFEQ). This province offers some of the lowest tax rates in Canada, with an overall corporate tax rate of approximately 27 percent. There are several economic development programs in place to assist growth in the region.
The Quebec Economic Development Program (QEDP) supports the economic development efforts of the region, including entrepreneurship, business performance, and investment.
The objectives of the Community Futures Program (CFP) include stability, economic growth, job creation, developing and maintaining sustainable communities, and competitive local economies in rural areas.
Infrastructure programs support improvements, rehabilitation, and expansion of existing community infrastructure. Incentive programs come in the form of grants, non-repayable and repayable contributions, depending on the programs. Nonprofit, public, or para-public organizations and First Nations governments are eligible for grant programs.
A number of economic development incentives help support growth. New capital investment in Saskatchewan hit an all-time record of $20.2 billion in 2012, according to a report by Statistics Canada. The incentives below are aimed at offsetting business costs of a growing corporation:
- Manufacturing and Processing Investment Tax Credit — This nonrefundable income tax credit is designed to encourage plant and equipment investment. This credit is available to all manufacturing and processing corporations with some allocation of taxable income to Saskatchewan.
- Research and Development Tax Credit — This 15 percent credit is fully refundable for Canadian-controlled private corporations; up to $3 million is available for qualifying research and development expenses.
- Municipal Property Tax Abatement — Municipalities are able to offer five-year property tax abatements. The amount of the incentive, qualifications, and management are defined per municipality.