2016 Federal Budget Highlights for the Aerospace Industry
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2016 Federal Budget Highlights for the Aerospace Industry

OAC corporate partner, KPMG, has prepared their view of 2016 Federal Budget Highlights for the Aerospace Industry and we are pleased to share this information with you.  

2016 Federal Budget Highlights for the Aerospace Industry 

In the March 22 federal budget, the Canadian government proposed several funding opportunities which benefit the Aerospace industry, with additional opportunities coming from more general innovation programs and ongoing tax benefits. 

Most notably, the budget defers for four years the more than $3.7 billion allocated in 2015 for large-scale capital defence projects, to better align with the timing of major equipment acquisitions. 

Leading up to 2020, however, aerospace companies have significant opportunities to benefit by contributing to the government’s new defence strategy, which will dictate how future funding will be allocated. 

Over the next year, the government’s Innovation Agenda will be developed, and will outline a new vision of Canada as a center of global innovation. 

Highlights for aerospace companies 


The budget commits $379 million over eight years for the Canadian Space Agency to continue to make valuable and innovative contributions to the International Space Station. As well, it promises $30 million over four years for Canada to participate in the European Space Agency’s Advanced Telecommunications Systems program. 

Through these projects, Canadian aerospace companies have opportunities to demonstrate their innovative capabilities globally, an important benefit considering 80 percent of what we produce is exported to international markets. With the Trans-Pacific Partnership and our Comprehensive Economic and Trade Agreement (CETA) with the European Union both inching ever closer on the horizon, the time for shining on the global stage has never been more critical. 

Strengthening innovation clusters

With a strong focus on innovation, the budget makes $800 million available over four years, starting in 2017, to strengthen innovation clusters by bringing key stakeholders, including the private sector, post-secondary institutions and government, together. The funding aims to create stronger, more valuable connections between knowledge producers and users, and ensure more innovative ideas are successfully brought to market. 

The budget also commits $50 million to the Industrial Research Assistance Program (IRAP) so that more organizations across Canada can take part, and promises $30 million a year starting in 2017 to the Natural Sciences and Engineering Research Council (NSERC), to further support university-based research. 

Aerospace companies can benefit from these investments to fuel R&D, especially when it comes to disruptive, breakthrough innovation, and bring products to market more efficiently. Taking advantage of strong innovation clusters and relationships with post-secondary institutions (something aerospace companies in many countries such as the US, Mexico, UK, France and Germany, already benefit from) can help further solidify the presence of Canadian firms on the global stage. 

Scaling up

The 2016 budget commits to helping fast-growing, high-impact companies across all industries better manage the challenges they face along their growth paths, including assisting with financing solutions, advisory services, and export and innovation support. 

Smaller aerospace companies can take advantage of this support to help better invest in innovation, secure the talent and funds they need to realize their untapped growth potential and launch their businesses into the global market. 

Tax relief

The government is maintaining the federal small business income tax rate of 10.5% for the first $500,000 of income. 

Again, this is good news for small aerospace companies, keeping their overall tax burden low, giving them more room to grow, and allowing them to contribute more to Canada’s economic growth. 

Jump starting the future

While Canada continues to experience slow growth, the 2016 Federal Budget’s funding and support projects aim to jump start parts of the economy and keep Canada competitive and thriving among its global counterparts. 

The Budget has several funding commitments that may benefit aerospace companies, big and small, in the short and long term. Taking advantage of those opportunities is the next step. 

It is a step that has the potential to put the spotlight onto the kinds of cutting edge innovations that aerospace companies across the industry in Canada can and must bring to market if they are to succeed and lead in today’s global business environment.

To learn more about the 2016 Canadian Federal Budget Highlights take a look at KPMG’s webcast replay available here.