After this year’s budget announcement we’ve come to one conclusion: It’s a great time to launch a Canadian small business.
On Tuesday afternoon, Federal Finance Minister Jim Oliver delivered a balanced 2015 federal budget with a projected $1.4-billion surplus. With the upcoming election, the Conservative government chose a balanced approach and were careful not to ‘rock the boat’ or cut existing commitments or programs (such as SR&ED) which had seen reduced funding in previous years.
The biggest impact in the 2015 federal budget will be for small-medium sized enterprises (SMEs).
Small Business Tax Rate Reduced
Beginning in 2016, the small business tax rate will be gradually reduced from 11% to 9%. This is a positive sign that they want to stimulate entrepreneurs and small business owners, especially young business owners.
Increased Funding and Mentorship for Young Entrepreneurs
The Futurpreneur Canada program will receive $14 million over two years to help business owners between the ages of 18 and 29.
“This investment will help an estimated 2,700 new young entrepreneurs access the programs, mentoring and resources they need to launch the small businesses that are critical to creating jobs, building communities and strengthening our economy.” —Rob Price, AB Director.
The Business Development Bank of Canada will also be receiving $700 million over three years to encourage “trade missions for women-led companies to widen exposure to international markets.”
Funding for Innovation in Manufacturing
Automotive parts suppliers will be receiving up to $100 million over 5 years to foster innovation and development. Many of these auto parts manufacturers are also eligible to claim the SR&ED tax credit for their technology advancements.
The “accelerated capital cost allowance” for manufacturers has been extended past its original 2015 lifespan. Companies will now be able to get tax breaks on equipment purchases until the end of 2025. This will help companies write-off machinery and equipment faster and boost the sector’s productivity.
Increase Tax Free Savings Account Contributions
The largest impact on Canadian citizens will be the increased Tax Free Savings Account (TFSA) contributions. The limit will be raised from $5,500 to $10,000 in 2016.
Impact on the SR&ED Program?
Thankfully, there weren’t any cuts or mentions of the SR&ED program as we saw in 2012. By one estimate, the changes introduced in the 2012 federal budget have already saved the government an estimated $1 billion. The program will continue to receive funding and support technological development in a variety of industries.
Overall, the 2015 budget commits to driving innovation and entrepreneurship and supporting advanced research. Canada is a highly supported entrepreneurial culture that will continue to innovate and compete on the global landscape.
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