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The 2025 federal budget delivers a clear message to Canadian manufacturing leaders: now is the time to amplify growth investments and leverage the budget’s credits and programs.
With new and expanded funds designed to lower the cost of modernization and boost productivity, Canadian manufacturers have a unique opportunity to accelerate their ambitions. Our Momentum report found strong investment appetite but limited use of available support, with 46% of surveyed manufacturing leaders not applying for government grants or tax incentives, highlighting a clear opportunity to increase uptake. To support that effort, we outline the major budget 2025 funds and programs supporting the growth of Canada’s manufacturing industry.
New: Productivity Super Deduction
Introduced in the 2025 federal budget, the Productivity Super Deduction marks a significant shift in how Canadian manufacturers can approach capital investment. Designed to fuel industry growth and competitiveness, this new federal measure streamlines the path to modernization by making large-scale upgrades and expansions more financially accessible.
By allowing immediate expensing, the Super Deduction lowers the after-tax cost of investing in productivity and capacity. Manufacturers can modernize facilities, upgrade equipment, and expand operations with greater financial flexibility, making it more attractive to invest now rather than delay.
This program is available to manufacturers who are taxpayers purchasing qualifying depreciable property in Canada, primarily for use in manufacturing or processing goods intended for sale or lease within the country.
Key highlights:
- Immediate 100% first-year tax write-off for new manufacturing equipment, clean energy assets, and qualifying buildings.
- Enhanced cash flow; deducts major investments in the first year, not over several years.
- Covers new or qualifying buildings used at least 90% for manufacturing, with full deduction if available for use before 2030.
- Front-loads tax savings for plant expansions, automation, and modernization projects.
- Encourages investment now as lower after-tax costs make it easier to upgrade and grow.
What could qualify?
Example A
A processing company is looking to expand their existing facility. This includes refurbishing existing structures and adding a new extension to the existing site. Both the refurbishment and the expansion would be eligible investments under the Super Deduction.
Example B
A manufacturer purchases new CNC machines; these machines can be immediately expensed under the Productivity Super Deduction, bringing tax savings forward on physical equipment investments.
Existing programs: What’s changed?
The federal budget entails important updates to existing programs that continue to support Canadian manufacturers. These changes include extended timelines, expanded eligibility, and increased funding, ensuring that manufacturers have more opportunities to invest in growth, innovation, and export activities. Below is a summary of the most relevant updates and their impact on the industry.
| Program | Key updates | Impact on industry |
|---|---|---|
| Scientific research and experimental development (SR&ED) tax credit |
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| Clean technology (CT) investment tax credit |
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| Clean technology manufacturing (CTM) investment tax credit |
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| Business scale-up and productivity grant |
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| CanExport grant |
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What could qualify?
Example A
A manufacturer developing a new product line—such as an advanced mechanical assembly or machine—can leverage the SR&ED tax credit to offset R&D costs. If the company is a zero-emission technology manufacturer (ZETM), then they may also be eligible to receive the 30% refundable clean technology manufacturing investment tax credit on equipment to produce ZETM components.
Example B
A manufacturer planning to expand into a new country or region, requiring trade-show presence, client visits, in-market travel, regulatory and label review, and translated marketing materials, while scaling up production at home, can leverage the CanExport program to cover up to 50% of eligible export development costs, and use the business scale-up and productivity grant to finance the expansion of production capacity to meet new international demand.
Provincial programs: Additional opportunities for manufacturers across Canada
Manufacturers can also access a variety of provincial programs tailored to local priorities. These initiatives complement federal funds, and in many cases can be stacked to offer additional support for modernization, innovation, and growth.
Some of the major provincial programs include:
Atlantic Canada: Atlantic investment tax credit (AITC)
Quebec: C3i tax credit for investment and innovation
Ontario: Advanced manufacturing and innovation competitiveness (AMIC) program
Alberta: Manufacturing and export enhancement program
Manitoba: Manitoba industrial opportunities program (MIOP)
British Columbia: CleanBC industry fund
For more details about provincial programs, contact us for personalized guidance and to facilitate connections with our regional teams.
Ready to invest? Let’s connect
The 2025 federal budget offers Canadian manufacturers a valuable opportunity to accelerate growth and modernize operations. The new and expanded programs have intricate requirements, and determining which incentives align with your priorities can be complex. Our team can help you navigate the options, identify the most relevant support, prepare the claim, and guide you through the application process. With a pragmatic, industry-focused approach, we tailor our advice to your business needs.
Curious about which program applies to your next project? Check out our Clean Economy Investment Tax Credits page for more information and connect with Martha Breithaupt to start the conversation.