banner image
PRESS RELEASE

2018 Budget remains a missed opportunity to support small and medium-size businesses

budget 2018
budget 2018Download Image

Toronto, ON - February 28, 2018

Yesterday, Finance Minister Bill Morneau presented a deficit budget. While maintaining a focus on gender equality and economic growth, the announced budget remains a missed opportunity to support the growth of small and medium-sized businesses in Canada.

The Government of Canada has taken a number of actions over the last year that have had major and wide-spread implications on the way businesses operate in Canada. This budget was an opportunity for the federal government to ensure Canadian private businesses can compete and innovate.

“Our goal is to work together with our clients to achieve a meaningful and sustained impact on the communities where we live and work across Canada,” says Heath Moore, National Tax Leader, Doane Grant Thornton LLP. “A strong business economy benefits a business and their employees. When business owners are worried about the impact these changes will have on their business that is an issue for the broader economy.”

Tax Fairness for Small and Medium-Sized Enterprises

  • The Grant Thornton Report on Doing Business in Canada found that one-third of both small and medium-sized businesses believe that the changes to passive investment income rules would hurt them. While the specific concerns expected didn’t materialize in the budget, there is still an impact on the ability for a business to benefit from the small business tax rate if its income from passive investments exceeds $50,000. Therefore, any business with accumulated assets that generate income in excess of $50,000 will be impacted because the business tax rate will be higher, increasing costs. In addition, there is no grandfathering for income generated from existing passive assets already held in the corporation as the government had previously indicated.

 The Need for Increased Innovation

  • The report also indicates that only three in ten small and medium-sized businesses have applied for federal government grants or tax deductions, citing concerns with complexity in the application process. As expected, the budget invests in innovation and skills through $2.6 billion in incremental support over five years in support for women-led businesses, reform to business innovation programs and the development of a modern approach to intellectual property. While this Budget included a number of relevant innovation commitments, we should continue to advocate for measures that address the onerous and complex qualification process.

 Diversity in the workplace

  • As expected, the budget seeks to advance the business interests of women, making key investments in women’s entrepreneurship. It is encouraging to see that the budget takes measures to increase gender equity in the workplace, although the proposed pay equity legislation will only target federally-regulated sectors. The Government of Canada’s commitment to invest $1.65 billion over three years through Business Development Bank of Canada and Export Development Canada has potential to support diversity in the workplace, ultimately strengthening our business climate.

Download our full Budget 2018 summary

The Report on Doing Business in Canada Report
The Report on Doing Business in Canada
Read this article
Budget 2018
Read this article
Budget 2018
up arrow

For further information, please contact:

Julie Ibrahim

Media Relations Manager

T +1 416 607 8744

E Julie.Ibrahim@doane.gt.ca

About Doane Grant Thornton LLP in Canada

Doane Grant Thornton LLP is a leading Canadian accounting and advisory firm providing accounting, audit, tax and advisory services to private and public organizations. We help dynamic organizations unlock their potential for growth by providing meaningful, actionable advice through a broad range of services. Doane Grant Thornton LLP is a Canadian member of Grant Thornton International Ltd, whose member and correspondent firms operate in over 130 countries worldwide. A listing of Grant Thornton offices and contact information can be found at: www.GrantThornton.ca.

Copy text of article