Entrepreneurs play a vital role in creating jobs, building communities and strengthening our economy. On April 21st, 2015, the Government of Canada released a budget that recognized the importance – a budget that the Canadian Federation of Independent Business (CFIB) referred to as one of the current government’s ‘strongest and most decidedly pro-small business budgets.’ Young entrepreneurs and small businesses should take note of this year’s budget. To help, here are five key items of importance to entrepreneurs.
In addition to supporting young entrepreneurs across the country through a $14M investment in Futurpreneur Canada over two years, the Government of Canada has committed to:
1. Reducing the small business tax rate from 11 percent to 9 percent by 2019. This will be the largest tax rate reduction for small businesses in over 25 years, incrementally decreasing taxes for small business owners by 2.7 billion by 2019.
2. Lowering Employment Insurance (EI) rates. The government will introduce a seven-year break-even EI premium rate-setting mechanism. Although it sounds like a mouthful, the change means that EI premiums will be equivalent to the cost of the EI program over time, and no higher. According to the government, this will result in a substantial reduction in the EI premium rate, from $1.88 in 2016 to an estimated $1.49 in 2017, a reduction of 21 per cent.
3. Expanding the services of the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to help small and medium businesses. BDC will open 9 new locations and will work with Futurpreneur Canada and other stakeholders to implement a new plan to support SMEs at each stage of their development. Additionally, the government has introduced some new services from EDC to support small businesses that are eager to expand. EDC is launching an online tool that will provide selective sales insurance coverage to small businesses within minutes – much quicker than the current approach. EDC is also extending its willingness to take on risk to support small businesses, including providing a 100% loan guarantee to Canadian banks to encourage them to extend more credit to smaller players.
4. Supporting women entrepreneurs through the Action Plan for Women Entrepreneurs. Initiatives include an online networking platform, a national forum, enhanced trade missions, and a campaign called ‘Just One Pledge’ to champion and encourage mentorship for female entrepreneurs. BDC is also extending $700 million of financing over 3 years to women entrepreneurs. To further support opportunities for women, the government has committed to modernizing Canada’s federal corporate governance framework to support and encourage women’s corporate leadership.
Futurpreneur Canada is supportive of these strides forward to support women entrepreneurs across the country. Our most recent demographic information shows a significant number of young women who are pursuing entrepreneurship – and in the past 12 months, 39% of Futurpreneur Canada-supported businesses launched were solely owned by women.
5. Reducing red tape and expanding electronic services for small businesses. The government has committed to reducing the frequency of required remittance payments by small businesses, benefitting roughly 80,000 new small business employers each year. Beginning in 2016, eligible new employers would be required to remit on a quarterly basis. The current system has new employers remitting withholdings (such as EI premiums from employee wages) monthly until they are able to demonstrate a good compliance record.The government has also announced the launch of a new Small Business Consultation Forum to meet twice a year to gather feedback from the SME community on the tax system. There are also plans to make the Liaison Officer Initiative, whereby CRA representatives answer the questions of small businesses, a permanent program, as well as plans to expand use of the Business Number as a common identifier for several different government services and programs. These changes are all aimed at reducing the compliance burden on small businesses so they can focus on growth.
To see the full list of initiatives announced in Action Plan 2015, you can visit the Government of Canada website.
Economic Action Plan 2015, Government of Canada
Fiona Wilson, Manager, Government Relations, email@example.com