{"id":42203,"date":"2025-12-09T10:06:45","date_gmt":"2025-12-09T15:06:45","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=42203"},"modified":"2026-04-10T12:08:18","modified_gmt":"2026-04-10T16:08:18","slug":"federal-budget-2025-strengthening-canadas-innovation-ai-and-intellectual-property-ecosystem","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/technology-ip-and-privacy\/federal-budget-2025-strengthening-canadas-innovation-ai-and-intellectual-property-ecosystem\/","title":{"rendered":"Federal Budget 2025: Strengthening Canada\u2019s innovation, AI, and intellectual property ecosystem"},"content":{"rendered":"\n<p>The 2025 Federal Budget (the \u201c<strong>Budget<\/strong>\u201d) outlines the Government of Canada\u2019s most significant innovation-focused investments in recent years. It emphasizes artificial intelligence (\u201c<strong>AI<\/strong>\u201d), quantum computing, intellectual property (\u201c<strong>IP<\/strong>\u201d) protection, venture capital growth, and major reforms to the Scientific Research and Experimental Development (\u201c<strong>SR&amp;ED<\/strong>\u201d) tax incentive program.<\/p>\n\n\n\n<p>These measures collectively aim to strengthen Canada\u2019s innovation ecosystem, improve commercialization pathways, and promote domestic ownership of intellectual property.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">1. Investing in AI and quantum technologies<\/h2>\n\n\n\n<p>The Budget commits $925.6 million over five years to develop sovereign AI compute capacity, ensuring that Canada maintains secure and competitive infrastructure to support domestic AI innovation. Key measures include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>building large-scale <strong>sovereign public AI infrastructure<\/strong> to support both public and private research;<\/li>\n\n\n\n<li>authorizing the <strong>Minister of Artificial Intelligence and Digital Innovation<\/strong> to identify and support strategic AI infrastructure projects through new Memoranda of Understanding with industry;<\/li>\n\n\n\n<li>enabling the <strong>Canada Infrastructure Bank<\/strong> to invest in AI infrastructure projects; and<\/li>\n\n\n\n<li>allocating $25 million over six years for <strong>Statistics Canada\u2019s new Artificial Intelligence and Technology Measurement Program (TechStat)<\/strong> to assess AI\u2019s impact on the economy and workforce.<\/li>\n<\/ul>\n\n\n\n<p>In parallel, $334.3 million over five years will be provided through the Defence Industrial Strategy to bolster Canada\u2019s quantum ecosystem, recognizing the technology\u2019s transformative potential in fields such as cybersecurity, finance, and logistics.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">2. Protecting and commercializing Canadian intellectual property<\/h2>\n\n\n\n<p>The Budget reinforces the importance of domestic IP generation and ownership as drivers of long-term competitiveness. Key measures include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>$84.4 million over four years (starting 2026\u201327) to <strong>extend the <\/strong><a href=\"https:\/\/elevate-ip.ca\/\">Elevate IP program<\/a>, supporting accelerators and incubators that help small and medium-sized enterprises (\u201c<strong>SMEs<\/strong>\u201d) develop IP strategies;<\/li>\n\n\n\n<li>$22.5 million over three years (starting 2026\u201327) to <strong>renew support for the <\/strong><a href=\"https:\/\/ised-isde.canada.ca\/site\/patent-collective-pilot-program\/en\/patent-collective-program-guide\">Innovation Asset Collective\u2019s Patent Collective<\/a>, which assists firms in leveraging patent portfolios and navigating global IP systems; and<\/li>\n\n\n\n<li>$75 million over three years (starting 2026\u201327) to <strong>extend the National Research Council\u2019s <\/strong><a href=\"https:\/\/nrc.canada.ca\/en\/support-technology-innovation\/nrc-irap-support-intellectual-property\">IP Assist Program<\/a>, providing direct advisory support to SMEs on protecting and commercializing their IP.<\/li>\n<\/ul>\n\n\n\n<p>The government also plans to conduct an <strong>Intellectual Property Performance Review<\/strong> to explore new mechanisms for:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>partnering with IP-intensive firms;<\/li>\n\n\n\n<li>retaining and commercializing IP in Canada; and<\/li>\n\n\n\n<li>supporting firms in protecting and exploiting IP in foreign markets.<\/li>\n<\/ul>\n\n\n\n<p>Finally, the Budget emphasizes improving legal certainty and transparency in the IP system to facilitate IP-backed financing and curb abusive practices.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">3. Enhancing the SR&amp;ED tax incentive program<\/h2>\n\n\n\n<p>The SR&amp;ED program remains Canada\u2019s most important research and development (\u201c<strong>R&amp;D<\/strong>\u201d) incentive, providing over $4.2 billion annually in support to businesses conducting scientific and technological research.<\/p>\n\n\n\n<p>The Budget confirms and introduces several enhancements to increase the program\u2019s impact:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>raising the<strong> enhanced credit expenditure limit<\/strong> from $3 million to $4.5 million;<\/li>\n\n\n\n<li>extending the <strong>enhanced 35% tax credit<\/strong> to eligible Canadian public corporations;<\/li>\n\n\n\n<li><strong>restoring eligibility<\/strong> for capital expenditures under the program; and<\/li>\n\n\n\n<li>increasing the<strong> prior-year taxable capital phase-out thresholds<\/strong> for enhanced credit eligibility.<\/li>\n<\/ul>\n\n\n\n<p>These reforms represent an ongoing annual investment of $440 million and are expected to generate approximately $1.2 billion in economic output each year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Administrative reforms<\/h3>\n\n\n\n<p>Recognizing concerns about the SR&amp;ED program\u2019s complexity and uncertainty, the Canada Revenue Agency(the \u201c<strong>CRA<\/strong>\u201d) will implement significant administrative improvements as of April 1, 2026:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>introducing an <strong>elective pre-claim approval process<\/strong> to provide up-front technical approval of eligible SR&amp;ED projects;<\/li>\n\n\n\n<li><strong>reducing processing times<\/strong> for approved claims to 90 days (from 180 days);<\/li>\n\n\n\n<li><strong>leveraging AI<\/strong> to streamline claim reviews and reduce unnecessary audits; and<\/li>\n\n\n\n<li>simplifying information requirements and revising <strong>Form T661<\/strong> to make the process less burdensome.<\/li>\n<\/ul>\n\n\n\n<p>These changes are designed to provide greater predictability and efficiency for businesses making R&amp;D investment decisions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">4. Scaling Canadian innovation and venture capital<\/h2>\n\n\n\n<p>To address early growth-stage funding gaps and promote the next generation of Canadian technology firms, the Budget proposes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>$1 billion over three years for the <strong>Venture and Growth Capital Catalyst Initiative<\/strong>, a fund-of-funds managed by the Business Development Bank of Canada to mobilize private venture capital, including from pension funds and institutional investors; and<\/li>\n\n\n\n<li>$750 million over three years to support a new strategy focused on <strong>early growth-stage firms<\/strong>, with details to be announced in 2026.<\/li>\n<\/ul>\n\n\n\n<p>These investments aim to enhance capital access for emerging fund managers and high-growth sectors such as life sciences and advanced technology.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">5. Implications for Canadian innovators and IP stakeholders<\/h2>\n\n\n\n<p>The Budget reflects a cohesive national effort to strengthen the link between R&amp;D investment, intellectual property generation, and commercialization. For technology companies, research institutions, and IP-intensive businesses, the practical takeaways include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>expanded SR&amp;ED incentives<\/strong> and a more predictable claims process;<\/li>\n\n\n\n<li><strong>improved access to AI compute resources<\/strong> and potential funding partnerships;<\/li>\n\n\n\n<li><strong>renewed IP advisory and collective programs<\/strong> to protect and leverage intangible assets; and<\/li>\n\n\n\n<li><strong>enhanced venture capital pathways<\/strong> to help scale IP-driven firms domestically.<\/li>\n<\/ul>\n\n\n\n<p>Together, these measures represent a material step toward establishing Canada as a global hub for innovation, AI leadership, and IP commercialization.<\/p>\n\n\n\n<p>For more information or assistance with SR&amp;ED eligibility, IP strategy development, or commercialization planning under Budget 2025, or IP funding available through government programs, please contact our <a href=\"https:\/\/www.millerthomson.com\/en\/expertise\/technology-ip-and-privacy\/\">Technology, IP and Privacy<\/a> Group.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The 2025 Federal Budget (the \u201cBudget\u201d) outlines the Government of Canada\u2019s most significant innovation-focused investments in recent years. It emphasizes artificial intelligence (\u201cAI\u201d), quantum computing, intellectual property (\u201cIP\u201d) protection, venture capital growth, and major reforms to the Scientific Research and Experimental Development (\u201cSR&amp;ED\u201d) tax incentive program. These measures collectively aim to strengthen Canada\u2019s innovation ecosystem, [&hellip;]<\/p>\n","protected":false},"author":122,"featured_media":30669,"parent":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[557],"insight-format":[416],"class_list":["post-42203","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology-ip-and-privacy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Federal Budget 2025: Strengthening Canada\u2019s innovation, AI, and intellectual property ecosystem | Miller Thomson<\/title>\n<meta name=\"description\" content=\"The 2025 Federal Budget introduces major investments in AI, quantum, IP protection, venture capital, and enhanced SR&amp;ED incentives to strengthen Canada\u2019s innovation ecosystem.\" 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