Federal budget throws a bone to Atlantic Canada’s manufacturers and small businesses
The federal government’s budget features a surplus of $1.4 billion, but it’s short on bells and whistles for the Canadian business community. However, Fred Bergman, senior policy analyst with the Atlantic Provinces Economic Council, thinks the region’s business community shouldn’t be too hard on the feds. “It’s got a razor-thin surplus for this year,” Bergman says. “There were not enough funds to do more than it has done.”
What the federal government has done is extend the capital cost allowance for manufacturers for investments made after 2015 and before 2026 (it was set to expire at the end of 2015.) It’s also reducing the 11 per cent federal small business tax rate by 0.5 per cent every year until it reaches nine per cent by January 1, 2019.
WHAT IT DOES:It allows manufacturers to claim a yearly deduction or depreciation on the cost of certain assets used in the business.
ESTIMATED SAVINGS: Bergman says APEC thinks the CCA will save Atlantic manufacturers $10.4 million in federal corporate income taxes in 2016/17, rising to $31.3 million by 2018/19.
Bergman says: “Extending the CCA gives companies options. If now is not the right time to expand, they can wait. It gives them time to plan.”
WHAT IT DOES: Canadian small businesses have been taxed at 11 per cent of their income up to $500,000. That will now be reduced to nine per cent by 2019.
ESTIMATED SAVINGS: APEC says the measure will reduce federal income taxes paid by Atlantic businesses by $12.5 million in 2016/2017, rising to $84.7 million by 2019/20.
Bergman says: “That’s a significant reduction and it’s a very popular move because it impacts so many businesses.”