On March 22, 2017, the Liberal government tabled their second federal budget. After much anticipation, budget 2017 contained no groundbreaking announcements, and as an independent small business owner here are the key things that you need to know:
EI Premiums are Increasing (outside Quebec)
- Employment insurance premiums are increasing in 2018 by approximately $1.4-billion over five years. This is to offset some of the government’s skills-training promises and the expanding flexibility of EI benefits for parents and caregivers.
- This means that payroll taxes will rise for 6 straight years due to the EI hike in 2018 followed by five years of CPP premium hikes beginning in 2019 (outside of Quebec).
- The 2017 rate had been reduced to $1.63, and it is now poised to increase to 1.68 per $100 of insurable earnings.
- These increases mean less money for current employers and increased cost when hiring new employees.
This continues to be one of our top lobbying priorities and we will continue our decades-long efforts to bring fairness for small business in the EI system.
Parental Benefits/Leave Extended
- The budget included a proposal to extend EI parental benefits over 18 months at a lower benefit rate of 33% of average weekly earnings. (The current EI parental benefits are available at the existing rate of 55% of average weekly earnings over a period of up to 12 months).
- The proposal also includes an extension of EI maternity benefits for women up to 12 weeks before their due date—up from the current eight weeks.
- The government has not yet announced when changes will be implemented, but we expect them to occur by 2018.
- As an employer, you will continue to be required to hold your employee’s job while they’re on maternity/parental leave.
- We have already urged government not to make these changes and will continue our lobbying efforts on this front.
Tax Increase on Alcohol and Tobacco Products
- Excise duty rates on alcohol and tobacco products have increased by 2% and 2.5% respectively, and will automatically be adjusted to the consumer price index on April 1 of every year starting in 2018.
- That means if you’re spending about $2,000 a year on wine and beer, your costs will increase by $40 to $2,040.
A win in Budget 2017! Reduce your red tape burden with electronic T4s
- CFIB has been advocating to minimize red tape and the cost of complying with your tax obligations for many years.
- Employers can distribute T4 slips for the 2017 tax year to active employees electronically as long as you have are adequate privacy safeguards, which CRA will specify later.
- This measure could save you up to $5 per slip on printing, distribution and administrative costs. (Employers will be required to provide a hard copy if employees request them).
Faster processing times for skilled workers
- As announced in fall 2016, the Government will launch a Global Skills Strategy to facilitate faster access to highly skilled foreign workers in “high-growth” sectors of the economy. For business owners needing highly skilled workers, the Global Skills Strategy will set an ambitious two-week standard (10 to 14 days) for processing visas and work permits for high-skilled workers under the International Mobility Program.
- The Government is also proposing to introduce a new work permit exemption for low-risk, short-duration work terms — which will apply for work terms of fewer than 30 days in a year, again for high-skilled foreign workers.
- CFIB continues to advocate for ambitious solutions to labour shortages for all workers of all skill sets.
No plan in sight to balance the federal budget
- With the Budget announcing significant estimated deficits of $28.6 billion, the possibility for tax rate reductions for small businesses in the near term appears to be slim.
- CFIB is urging the government to introduce a plan to get back to a balanced budget and deliver on their election promise to reduce the small business tax rate to 9% by 2019.
No Change to Capital Gains Inclusion Rate & other tax changes coming
- Despite months of wide speculation that the capital gains inclusion rate would be increased, it will remain at 50%.
- Tax benefits for small business are under the microscope, as the government is reviewing several important tax measures that they suggest may “inappropriately reduce personal income taxes of high-income earners” over the coming months.
- CFIB has been actively contributing to consultations and committee hearings on these issues and will continue to press the government on making sure tax fairness includes small business owners.
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