The federal government tabled the 2018 budget on February 27th and we were there in Ottawa to analyze every detail so that we could give you the scoop on the measures that matter for your business.
In general, the budget doesn’t contain any big changes for small businesses. However, the budget did contain the long-awaited details on the changes to rules on passive investment income which have been (slightly) softened. All in all, budget 2018 does not focus on improving competitiveness or growth for small businesses.
Tax changes and passive investments
While the government didn’t completely abandon the changes to passive investment income as we’ve been urging them to do, their modified plan will be somewhat less harmful to your business. The new rules appear to be simpler and may even improve things for some business owners from the earlier proposals. However, others will lose the benefit of the lower small business rate due to past investments. It is especially concerning that the new plan ends the benefit of “grandfathering” past investments from the earlier proposal.
Budget highlights and lowlights
The good news:
- Working While on Claim: Your employees will now be able to work while receiving their employment insurance (EI) benefits, which is especially helpful to those looking to progressively return to work.
- Better customer service: The government will be taking a close look at the phone and online services for the Canada Revenue Agency, the Canadian Border Services Agency, and the EI program with the goal of making them better for your business.
- Red tape and paper burden: The government knows it has to do more to reduce red tape for your business. It will be looking to make regulatory reforms aimed at improving business growth and innovation.
- Women entrepreneurs: If you’re a female business owner, there’s a lot for you in this budget, including measures aimed at improving your access to capital.
- Women in the trades: The government is looking at ways to encourage more women to enter the trades, which have been traditionally male-dominated. In order to do so, they’re offering incentives such as female apprenticeship grants.
The not-so-good news:
- Payroll taxes: The government didn’t include anything in this budget that would help your business cope with the payroll tax increases coming your way in the next few years (including EI and CPP).
- Government debt and deficit: There are still no plans in place to return to balanced budgets between now and 2022-23.
- Employment Insurance and Parental Leave: Five weeks of additional parental leave have been added for parents looking to split their leave. This will not lead to increased premiums because the new costs will be offset by the lower than anticipated unemployment rate. As a result, there are currently no planned EI premium hikes, but we’re remaining vigilant.
- Business transfers: No measures were announced in the budget to make it easier to pass your business on to the next generation, so we’re still left waiting for the government to make these much-needed changes.