G/SCM/Q2/CAN/59  
 
29 April 2014  
(14-2619)  Page: 1/4  
Committee on Subsidies and Countervailing Measures  Original: English  
 
  SUBSIDIES 
REPLIES TO QUESTIONS FROM AUSTRALIA1 REGARDING THE 
NEW AND FULL NOTIFICATION OF CANADA2 
The following communication, dated 26 April 2014, is being circulated at the request of the 
Delegation of Canada.  
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  Q.1 Page 2 Introduction 
 
 Canada indicates that its notification incl udes programs at the sub-federal level. 
Could Canada clarify that these programs are delivered at the sub-federal and are 
funded through federal level assistance or  joint federal/provincial assistance.  
 Reply 
 Sub-federal programs notified are funded and deliv ered exclusively by the provinces and territories 
of Canada.   
Q.2 Page 3, 1.4 Automotive Innovation Fund 
 
 Could Canada please clarify the scope of eligible recipients, specifically whether 
the Fund assists automotive vehicle manuf acturers as well as automotive parts 
producers?  
Reply 
 
Under the AIF, eligible recipients are corporations that carry on operations related to vehicle or powertrain assembly operations such as original equipment manufacturers (including parts 
manufacturers).  
 
 Could Canada clarify how many automotive  manufacturers have benefited during 
the reporting period?  
 Reply 
 During the reporting period, AIF funds were provided to 2 vehicle manufacturers, Magna 
International and Toyota Motor Manufacturing of Canada.  
Q.3 Page 10, 1.19 Communit y Diversification Program 
 Financial assistance is provided in th e form of repayabl e and non-repayable 
contributions as well as grants. Australia note s that this appears to be a feature of a 
range of other Community programs notified.   
                                               
1 G/SCM/Q2/CAN/56. 
2 G/SCM/N/253/CAN. G/SCM/Q2/CAN/59 
 
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   Could Canada please clarify how it dete rmines when assistance is through non-
repayable contributions and when it provides grants?   
Reply 
 The Community Diversification Program was replaced by the Quebec Economic Development Program (QEDP) in 2012. However, the same type of assistance is provided under the new 
program, which is governed by a set of terms and conditions. 
 
As outlined in the terms and conditions, contribu tions are the preferred fo rm of transfer payment 
under the QEDP. However, on rare occasions, a grant could also be awarded. The decision to 
award a grant rather than a contribution is partly  based on the nature of the project, the amount 
being awarded and the level of risk. Grants may be approved for low-risk projects consisting of a 
single activity or phase (e.g. study, plan).  
 
Contributions must be repayable when projects result in what would normally be considered commercial activities – in other words, when profits are expected or likely. Generally, contributions 
provided to businesses are repayable, while those provided to non-profit organizations are non-
repayable. 
 
 How does Canada distinguish between non-repayable contributions and grants? 
 
Reply 
 
These are terms defined in the federal government's Policy on Transfer Payments3: 
 
 A grant is a transfer payment subject to  pre-established eligibility and other 
entitlement criteria. A grant is not subject to being accounted for by a recipient nor 
normally subject to audit by the department. The recipient may be required to report on results achieved.  
 A contribution is a transfer payment subject to performance conditions specified in a 
funding agreement. A contribution is to be accounted for and is subject to audit.  
 In summary, the difference between the two forms of payments is the level of 
accountability required for the recipient. 
 
Q.4 Page 31, 7.5 Investment Agriculture Fo undation (IAF), Marketing BC Primary AG 
Products  Funding is directed to the Inve stment Agriculture Foundation. 
 
 Could Canada please provide advice on the criteria for receiving assistance? Who is 
eligible to receive assistance? 
 
Reply 
 
Priority for funding will be given to five areas of activity identified to advance innovation and 
competitiveness in BC, and include:  
 Advancements in plant, animal and food science 
 Energy and waste management 
 New product development and commercialization 
 Improvements in soil, water and air quality 
 Climate change adaptation 
 Applicant organizations must have a head office or be registered in BC. Eligible participants 
include: 
 
                                               
3 http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?section=text&id=13525  G/SCM/Q2/CAN/59 
 
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   BC agri-food sector producers and processors 
 Industry associations/organizations 
 Retail and food service businesses 
 Input, technology and support services providers 
 Academic institutions and/or other organizations and private sector businesses 
 Regional districts and local governments 
 
Q.5 Page 37, 14.1 Biopharmac eutical Investment Program 
 The program's mandate is to attract new biop harmaceutical investments in Ontario or to 
enhance existing investments.  
 
 The program provides grants and loans. How is the form of assistance to a 
recipient determined? 
 
Reply 
 
Approved funding was provided in the form of conditional grants. However, the ministry may have 
considered requests for funding in the form of a loan on a case by case basis. The program is no longer active and loans were never issued under the program.   
 Are there performance requirements for recipi ents of grants and loans? If so, could 
Canada please clarify the nature of  these performance requirements?  
 
Reply 
 
Recipients were required to hit performance targ ets and make commitments to project investment 
levels and achieving explicit job targets.  
 For R&D oriented projects/grants, companies had to achieve incremental R&D performance 
requirements. Incremental R&D is defined as a level of new R&D investment that exceeds the 
applicant's baseline R&D in Ontario. The applicant's baseline R&D is its lowest annual R&D 
investment in Ontario for the previous three years as  determined by an external firm on behalf of 
the Ontario Ministry of Research and Innovation which will established a consistent methodology to 
review all applicant's tax credits requested under the federal government's Scientific Research & 
Experimental Development tax incentive prog ram (SR&ED) for the previous 3 years.  
 
Q.6 Page 38, 14.3 Emerging Technology Program  
 Canada has clarified that ‘for givable performance loans' are loans that will be forgiven 
provided that certain targets are met. 
 
 Could Canada please clarify what type of targets and performance requirements 
are set?  
 
Reply 
 
The Northern Ontario Heritage Fund Corporation has not provided any forgivable performance 
loans since 2005. Performance requirements were determined on a case-by-case basis and depended on the specific project and the type of capital project.   
Q.7 Page 41, 14.11 Ontario Au tomotive Investment Strategy  
 
 Could Canada please clarify who is elig ible to receive assistance under this 
program?  
 
Reply 
 The program is open to incorporated legal entities or other legal entities acceptable to Ontario that are investing in automotive assembly and automotive parts manufacturing projects in Ontario.   G/SCM/Q2/CAN/59 
 
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   What are the criteria to receive assistance?  
 Reply 
 
The minimum thresholds for investment in projects include: 
 
 Investment and/or jobs commitments 
 Demonstrated need for public support 
 Investments in innovation, training, public in frastructure, improved energy efficiencies 
and/or environmental technologies 
 Preference for projects with partnerships with Ontario public institutions 
 
 Are there performance requirements? 
 
Reply 
 
Companies are expected to meet all contractual obligations, including job and investment 
commitments.  
 
 How many automotive companies received assistance in the two reporting years? 
 
Reply 
 
A total of 6 companies in the automotive sector received assistance through the program in fiscal 
years 2010/11 and 2011/12, as well as a number of universities.  
 Q8 Page 49, 17.9 Tax Reduction on Capital for the Acquisition of Ships  
 
 Could Canada please provide details on whether fishing vessels for the fishing 
industry also benefited fr om the tax reduction? 
 
Reply 
 
Fishing boats belonging to Québec owners could benefit from a reduction in the tax on capital in 
the 4 years following delivery of a vessel of 50 tonnes or more built in a Québec shipyard. 
However, no eligibility certificate was delivered in respect of any fishing boat in the 2010/11 and 2011/12 fiscal years.  
 
This program is no longer in effect, as the rate of tax on capital has been reduced to zero. The fishing industry did not receive any benefit from this program in the 2010/11 and 2011/12 fiscal years. 
 
 
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