Tax credits available to manufacturers to aid pandemic recovery
Ontario has been stuck trying to spark manufacturing investment outside of the GTA and address a skills shortage throughout the pandemic.
Research & Development
Technology / IIoT
With the Ontario budget being released on Mar. 24, renewed focus has been placed on the two tax credits available to Ontario manufacturers trying to rebound amidst the pandemic. The Regional Opportunities Investment tax credit and the Refundable Ontario Jobs Training tax credit hope to address stagnant growth and a skills shortage that date back to prior to the pandemic.
According to Dennis Darby, President and CEO of Canadian Manufacturers and Exporters, capital expenditure in manufacturing has dropped over the last few years, and Ontario has been stuck trying to spark manufacturing investment outside of the GTA. The Regional Opportunities Investment tax credit is meant for manufacturers outside of the GTA to scale up their businesses, and provides a 10% rebate for any manufacturer who spends $50,000 to expand, renovate or acquire a new building for their operations. This tax credit hopes to de-risk investments in technology and the costs associated with the transition to Industry 4.0.
The Ontario Jobs Training tax credit meanwhile hopes to address the serious skills shortage in the province of Ontario. Prior to the pandemic, the number one issue facing manufacturers was a talent shortage. Even in the middle of the pandemic, the main priority for manufacturers was finding that talent. Programs like Skills Ontario are attempting to promote careers in the skilled trades to that end, though their reach is limited. The Jobs Training tax credit provides a 50% coverage of all eligible expenses for training up to $2,000. However, the credit only applies to occupational skills courses, trade or professional exams, or postsecondary education courses, limiting its reach.
With so many skilled workers losing their jobs due to the pandemic, retraining and re-skilling should also be a priority in addressing the talent shortage, and having a tax credit apply to a retraining or re-skilling program may help.
Additionally, the skills shortage could be addressed through immigration policy as well, a fact recognized by Dennis Darby.
“One of the big questions being asked right now by Skills Ontario and programs like is ‘how do you get immigrants to stay in Ontario?’” he said. “So many people come here for a degree and then once they graduate, they end up leaving. If we want our manufacturers to be part of the revenue stream, we need to convince our students and immigrants to commercialize in Canada.”