Regulatory Sandbox
Canadian businesses can face regulatory barriers to bringing new products or services to market efficiently when the rules are outdated or do not account for innovation.
A regulatory sandbox is a tool that can help federal regulators keep pace with changing technologies and reflect current business realities, challenges, and opportunities.
Regulatory sandboxes can allow industry to demonstrate the real-life impacts of a new product or service in the marketplace under a temporary set of rules and controlled by regulatory supervision. This can help a regulator safely decide whether to make any permanent changes to how that product or service should be regulated.
Let’s use light sport aircraft as an example
Transport Canada is working with a number of flight schools to examine whether light sport aircraft can be safely used for pilot training. Evidence gathered from the regulatory sandbox will help Transport Canada determine whether the innovative use of the aircraft should be permanently allowed, and if any regulatory changes are needed to allow the aircraft.
In Budget 2024, the government committed to increasing the use of regulatory sandboxes across government. It also announced its intent to amend the Red Tape Reduction Act. These changes will make innovation easier by allowing temporary limited exemptions to existing legislation and regulations in order to run a regulatory sandbox.
Regulatory sandboxes must protect the health, safety, security, and well-being of Canadians and of the environment. A regulatory sandbox may not be appropriate or possible in all circumstances and regulators should factor this into their decision before running a regulatory sandbox.
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