Dealing with distress: business restructuring and rescue
Businesses in every sector and geography are having to transition to new ways of operating within a rapidly changing and increasingly uncertain legal and regulatory landscape.
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The 2021 federal budget includes commitments to investing in innovation and growing businesses as a means to recover from the COVID-19 pandemic.
The federal government published its 2021 budget, titled Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience (Budget 2021). Budget 2021 is the first budget presented in over two years due to the COVID-19 pandemic. The primary focus of Budget 2021 is to finish the ongoing battle against the pandemic. To that end, Budget 2021 prioritizes investing in industry and innovation to facilitate Canada’s economic recovery.
The federal government aims to help small businesses grow and expand by encouraging them to, among other things, embrace new technologies.
Immediate expensing for eligible investments in digital assets and intellectual property
Budget 2021 proposes to allow Canadian-controlled private corporations to immediately expense the full cost of certain depreciable property, including eligible investments in digital assets and intellectual property. This measure is intended to allow businesses to immediately deduct the cost of assets (once available for use), making investment in productive assets more attractive. A business may expense up to a maximum of $1.5 million per taxation year for such properties acquired on or after budget day (April 19, 2021) and which become available for use before 2024. For a more detailed analysis of the tax impacts of Budget 2021, see our publication 2021 Canadian Federal Budget: Advancing in a new reality.
Enhanced financing and expanded loan class eligibility to include lending against intellectual property
Budget 2021 proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. Proposed amendments include expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses, increasing maximum loan amounts from $350,000 to $500,000, and extending loan coverage from 10 to 15 years for equipment and leasehold improvements.
Support for projects led by Canadian businesses in collaboration with colleges, CEGEPs, and polytechnics
Over a two-year period starting in 2021-22, Budget 2021 proposes to provide $46.9 million to support research partnerships between colleges, CEGEPs, polytechnics, and businesses, and $5.7 million to enable businesses to access equipment, facilities, and expertise at college-affiliated Technology Access Centres.
The federal government aims to reinvigorate the entrepreneurial spirit to help revitalize the economy.
Starting in 2021-22, Budget 2021 proposes additional funding to support Canadian entrepreneurs:
Supporting equity deserving entrepreneurs
Budget 2021 includes a welcome acknowledgement that the barriers faced by entrepreneurs from equity deserving groups hold the economy back. To combat this, starting in 2021-22, Budget 2021 proposes specific funding and measures to support entrepreneurs from these groups:
The federal government aims to help entrepreneurs and businesses translate Canada’s world-class leadership in research into innovative products and services.
Investing in specific innovation areas
Starting in 2021-22, Budget 2021 proposes to provide funding to support a variety of innovative fields through new or existing funds and strategies:
Promoting access to expert intellectual property services
Budget 2021 proposes to promote access to expert intellectual property services:
Budget 2021 provides innovative organizations with tax incentives, financing opportunities, and enhanced access to expert intellectual property services. These measures will provide innovators with new opportunities to improve their IP positioning, which they can leverage as the pandemic recedes.
IBOR reform or LIBOR replacement represents one of the biggest changes to the financial services industry and impacts on all businesses that deal with it.
There are increasing calls from investors with global investment portfolios for a reliable reporting framework that allows for comparable climate and other environmental, social and governance (ESG) reporting between companies.
© Norton Rose Fulbright LLP 2022