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Budget 2025 sets out a clear growth‑and‑productivity agenda and materially reinforces the country's intellectual property and innovation ecosystem across taxation, research and development (R&D), AI infrastructure, and capital markets. It pairs near‑term cost‑of‑capital relief with longer‑term capacity building through research incentives and IP-commercialization programs.
Taken together, the budget is pragmatic—if not yet transformational—and is likely to improve enterprise‑level incentives to create, retain, and scale Canadian IP while easing long‑standing frictions that hinder commercialization.
What the budget gets right for IP and innovation
The centrepiece is the "Productivity Super-Deduction," which reintroduces and expands accelerated expensing and capital cost allowances across a broad class of productivity-enhancing assets, expressly including patents, data network infrastructure, and computers. It also allows businesses to write off costs by allowing immediate expensing of capital expenditures for scientific research and experimental development. This matters for IP because it narrows the cash flow gap between invention and monetization, enabling earlier reinvestment and de-risking intangible asset formation.
On the innovation side, the government doubles down on the Scientific Research and Experimental Development program. Enhancements increase the expenditure limit for the enhanced credit to $6 million effective for taxation years beginning on or after December 16, 2024, extend eligibility to Canadian public corporations, and restore capital expenditure eligibility, changes that more closely align the incentive with the real cost of scaling applied research.
Various administrative reforms have also been proposed: an elective pre‑claim approval process and AI‑enabled triage at the CRA aim to cut certain processing times in half, reducing a long-standing pain point that has discouraged consistent use of the program.
The budget's AI provisions are strategically relevant to IP creation and retention. A $925.6 million, five‑year commitment to AI infrastructure should increase domestic access to high‑performance initiatives and reduce dependence on foreign platforms, supporting the development and commercialization of AI models and related IP in Canada.
Complementary funding for TechStat will equip policymakers and industry with better measurement of AI adoption, while quantum investments through the Defence Industrial Strategy should seed future IP in secure communications, optimization, and cryptography.
Crucially, the budget directly addresses IP capabilities and grants. Notably, the budget provides renewals and extensions for Elevate IP ($84.4 million over four years, starting in 2026‑27), the Innovation Asset Collective's Patent Collective ($22.5 million over three years, starting in 2026‑27), and NRC's IP Assist Program ($75 million over three years, starting in 2026‑27). This would immensely drive innovation by directly supporting small and medium-sized enterprises (SMEs) to professionalize IP strategy, lower the cost of freedom‑to‑operate, and improve portfolio quality.
A forthcoming intellectual property performance review and IP‑backed lending signals a shift from programmatic supports to systemic enablement of innovation in Canada.
Finally, the capital formation pillar—particularly the $1 billion Venture and Growth Capital Catalyst Initiative and a prospective $750 million strategy for early growth-stage firms targets the scale‑up gap that often forces Canadian IP to exit prematurely. If executed alongside clearer IP‑backed lending standards, these moves could meaningfully improve the odds that Canadian IP is retained and commercialized domestically.
Bottom line
Budget 2025 substantively improves the fiscal and operational conditions for inventing and owning IP in Canada. The combination of accelerated expensing for patents and digital infrastructure, stronger and more predictable Scientific Research and Experimental Development (SR&ED), AI infrastructure, and targeted IP commercialization supports should raise the rate of domestic IP creation and retention.
Key IP and innovation measures at a glance
|
Measure |
Description |
Scale/timing |
Expected impact |
|
Productivity super‑deduction |
Accelerated write‑offs covering new capital investment, including immediate expensing of patents, data network infrastructure, computers, certain clean technologies, SR&ED capital, and M&P machinery and equipment. |
Average annual support of $2.7 billion; potential output up to ~$9 billion annually over 10 years. |
Lowers cost of capital; accelerates IP and technology adoption; improves competitiveness vs. U.S.; Canada's METR reduced by >2 percentage points, lowest in G7 and below OECD average. |
|
SR&ED enhancements |
Increases enhanced credit expenditure limit from $4.5 million to $6 million; extends enhanced credit to Canadian public corporations; restores capital expenditure eligibility; administrative reforms via elective pre‑claim approval and AI‑enabled triage. |
SR&ED provides $4.2 billion annually; plus $440 million ongoing; expected to generate ~$1.2 billion in annual output; elective process targets 90‑day processing for reviewed claims. |
Stronger incentives and faster decisions reduce uncertainty and scale applied R&D better alignment with growth‑stage cost structures. |
|
Sovereign AI compute |
Large‑scale public AI infrastructure to boost compute availability and ensure sovereign capacity. |
$925.6 million over five years starting 2025‑26; $800 million reallocated within fiscal framework. |
Increases domestic capability to develop and commercialize AI IP; reduces reliance on foreign compute. |
|
AI and technology measurement (TechStat) |
Statistics Canada program to track AI usage and impacts. |
$25 million over six years starting 2025‑26; $4.5 million ongoing, from existing resources. |
Better evidence base for policy and firm benchmarking; improves program targeting. |
|
Quantum ecosystem support |
Investments through the Defence Industrial Strategy. |
$334.3 million over five years. |
Builds pipeline of defensible, dual‑use IP in quantum technologies. |
|
Elevate IP |
Extends support to help SMEs build and execute IP strategies to commercialize and leverage intangible assets. |
$84.4 million over four years, starting in 2026‑27. |
Strengthens SME IP capabilities, commercialization readiness, and IP retention. |
|
Innovation Asset Collective — Patent Collective |
Renews support for the Patent Collective to assist firms in protecting, managing, and leveraging patents for commercialization. |
$22.5 million over three years, starting in 2026‑27. |
Lowers freedom‑to‑operate risks and improves portfolio quality. |
|
NRC — IP Assist Program |
Extends NRC's IP Assist to provide advisory and related supports for protecting and commercializing IP domestically and abroad. |
$75 million over three years, starting in 2026‑27. |
Helps firms identify, protect, and commercialize IP; supports export readiness. |
|
Venture and growth capital |
Fund‑of‑funds to crowd in institutional investors; support for new/emerging managers and life sciences; early growth‑stage strategy in development. |
$1 billion over three years (from 2026‑27) for the Venture and Growth Capital Catalyst Initiative; $750 million proposed for early growth‑stage gap (details in 2026). |
Expands late‑seed to growth financing; mitigates IP flight risks; strengthens domestic scale‑up pathway. |
If you have questions about how Budget 2025 may affect your intellectual property rights or strategy, please contact your Gowling WLG IP professional.
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