As Canada faces economic challenges on a global scale, recent measures outlined in several provincial budgets offer incentives for businesses to pursue domestic opportunities for sustained growth.
Ontario, Quebec, British Columbia and Alberta each announced key tax measures as part of their respective 2025 budgets. Addressing the cost of living, incentivizing investment, stimulating business and confronting U.S. tariffs emerged as common themes across the four budgets.
It’s important to note that some measures, including additional tax credits to support business, still require legislative approval before taking effect.
Here are some of the key provincial opportunities Canadian businesses could consider leveraging.
Ontario
Encouraging investment in manufacturing was a key area of focus in Ontario’s budget—which it unveiled on May 15—as the province works to further establish a resilient, self-reliant economy.
The expanded Ontario Made Manufacturing Investment Tax Credit (OMMITC) would temporarily increase the credit rate for Canadian-controlled private companies (CCPCs) and allow certain non-CCPCs to participate as well.
With the vulnerabilities of Canada’s manufacturing sector laid bare by U.S. tariffs, these proposed measures could bolster business in Ontario while making the province more attractive to foreign capital investment.
To ensure the credit would be properly utilized, the budget proposed revising the OMMITC to require repayment of the credit if relevant capital property is sold, converted to a non-manufacturing or processing use, or if certain assets move out of Ontario within five years. Businesses should be wary of not triggering new repayment conditions.
Increasing the supply of affordable rental properties in Ontario—home of some of the country’s most expensive municipalities for renters—was another goal of this budget. Municipalities will be permitted to reduce property tax rates by up to 35 per cent on eligible affordable rental housing units, and the 13 per cent HST on qualifying purpose-built rental housing will be removed. These changes should assist rental businesses in offering new units.
Ontario also plans to expand digital services related to the province’s tax system to ease compliance—a welcome change for businesses that need to report and pay tax provincially.
Quebec
Technology and critical minerals were key targets of Quebec’s 2025 provincial budget.
The province announced on March 25 it will revamp tax measures related to research and development (R&D) activities to stimulate competition. Quebec also intends to integrate additional support for businesses leveraging artificial intelligence into its tax credit system.
These measures come after the federal government announced late last year that it would update its scientific research and experimental development (SR&ED) tax incentive program to better support businesses.
Revisions to Quebec’s R&D credit programs will require existing claimants to review their activities to ensure their eligibility is not affected. These revisions are also expected to allow companies to access these powerful tax incentives for work that was not previously eligible, which could allow for additional compensation for the cost and risk of undertaking R&D activities.
Businesses could also consider exploring recent tax credit changes in Quebec’s mining sector. The imposition of U.S. tariffs along with ongoing economic uncertainty mean critical and strategic minerals are an increasingly vital component in Canada’s economic independence.
British Columbia
British Columbia’s budget from March 4 included measures to incentivize investment in small business and key areas like film and media while remaining environmentally conscious.
The province announced an increase to its small business venture capital program and tax credit to encourage equity investments in B.C. businesses. It also extended the dates to qualify for a refundable income tax credit for qualifying retrofits to eligible commercial and multi-unit residential buildings with four or more units to support green building initiatives.
B.C.’s film, animation and interactive digital media industries will also see the following new measures that should appeal to construction and media businesses looking to offset costs:
- An increase to the amounts for basic film incentives, basic production services and interactive digital media tax credits
- A new major production tax credit
- An extension of the regional and distant location tax credits to animation productions
Other provinces
Alberta’s budget, which was released Feb. 27, did not include major tax expenditures. It focused primarily on providing tax relief to individuals, reiterating the province’s commitment to introducing a new tax bracket of 8 per cent on the first $60,000 of income.
New Brunswick and Newfoundland and Labrador had similarly limited budgets; New Brunswick announced no new tax measures, while Newfoundland and Labrador delayed its increase to the gas and diesel tax by one year.
Nova Scotia and Prince Edward Island announced changes to their small business exemptions, which would allow businesses with income under a certain threshold to qualify for a lower tax rate. Both provinces will increase the threshold limit from $500,000 to $700,000 (Nova Scotia) and $600,000 (P.E.I.). These measures should allow more businesses to qualify for the reduced tax rate.
Nova Scotia will also decrease its small business tax rate by one percentage point, while P.E.I. will decrease its general corporate tax rate by one percentage point.
Saskatchewan and Manitoba announced a few measures for businesses, notably:
- Saskatchewan extended the application period for its Saskatchewan Commercial Innovation Incentive (SCII). This is the province’s patent box regime which provides tax incentives for intellectual property investment. The federal government previously announced it is designing its own patent box regime.
- Manitoba increased the payroll threshold for an employer to be subject to the province’s health and post-secondary education tax levy, effective 2026.
Manitoba is also following B.C.’s lead to extend provincial sales tax to cloud computing services. While this is technically a new cost for businesses, the decision as well as the SCII both reflect a more digital and knowledge-based economy.
