After much anticipation, budget 2017 contained no groundbreaking announcements. While small business owners will be relieved with what was not in the budget, such as measures that would have increased the capital gains tax or reduced access to the small business tax rate, there are several important small business measures under threat in the months ahead.
DAN KELLY ON BUDGET 2017
CFIB President shared his comments from Parliament Hill after the Federal Government released its new budget
The biggest negative for you and your employees is a projected 3% increase in Employment Insurance (EI) rates in 2018. The payroll budgets of every business will increase now for 6 straight years due to the EI hike in 2018 and 5 years of CPP premium hikes starting in 2019 (outside of Quebec). As a consequence of this measure, the take home pay for Canadian workers will also drop during the same period.
Small business taxes – Worries going forward
While we were pleased the government did not make changes to capital gains taxes, the lifetime capital gains exemption or the small business rate, it did announce plans to review several important small business initiatives they suggest may “inappropriately reduce personal income taxes of high-income earners”. This includes sharing income among family members involved in a business and capital gains. CFIB is worried this review may further limit access to the lower small business rate in the future.
Several victories and encouraging developments.
After much pressure from CFIB and lots of feedback and input into the discussions leading up to budget day, we were pleased to see some new measures, including:
- Electronic T4s: You will now be able to distribute T4 slips electronically to employees
- Canadian Free Trade Agreement (CFTA): The government will strengthen internal trade through the CFTA, expected to enter into force by 2017
- Several investments in skills building programs
- A new procurement initiative to support innovative entrepreneurs
- A review of measures to allow less costly transfers of businesses to family members
- Measures to make it faster and easier to employ foreign workers
The deficit: still no end in sight
Concern over the deficit has risen in recent years to become the number two issue for members, just behind the total tax burden. This budget provides no plan to get back to balance over the next five years. We are 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.
CFIB will continue to monitor many of these developments – particularly the review of key small business tax policies – in the months ahead.