As we barrel toward close of business, all eyes are on the federal 2021 election projections. With a lead margin of 1.6 per cent in voter support for the Liberals over the Conservatives, a clear path to majority for either party remains opaque. With three days left in the election cycle, and a 44th parliamentary session imminent, we’re breaking down the costed tax and incentives policy proposals across major parties. For enterprise organizations, SMEs and start-ups, here are the funding programs and policies we’ll be tracking post-election.
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- Support for SMEs: Loans of up to $200,000 would be made available, with up to $50 thousand being forgiven, for retail, hospitality, and tourism SMEs.
- Tax credit for small business investors: Canadians would be allowed to claim a 25 per cent non-refundable personal income tax credit on amounts up to $100 thousand when investing in Canadian-controlled private corporations with net assets of $40 million or less. This tax credit would be effective from Jan. 1, 2021, to Dec. 21, 2023.
- Wage subsidy for new hires: This 25 per cent wage subsidy would be payable to businesses based on salaries and wages of net new hires (April-June 2021). It would also include a top-up for those previously unemployed for six months or more. Eligible expenses would be capped at $1,129 per employee, per week and would be effective from Oct. 24, 2021, to April 24, 2022.
- Patent Box: A patent box would be introduced to reduce the corporate income tax rate from 15 per cent to 7.5 per cent for large corporations and to 4.5 per cent for small businesses. Profits generated from Canadian R&D beginning in 2022 would be eligible for the reduced income tax rate.
- Tax credit for new capital investment: A five per cent tax credit on new capital investments made in 2022 and 2023 would be provided for all corporations filing a T2 tax return. Companies eligible for the small business deduction would receive a refundable credit of up to $25 thousand.
- Support for tech start-ups: Flow-through shares for technology start-up firms would allow the firms to transfer eligible expenses to the owners of the shares, allowing the shareowners to claim expenses on their tax filings as of Jan. 1, 2022.
- Doubling the Apprenticeship Job Creation Tax Credit: From Jan. 1, 2022, to Dec. 31, 2024, employers would be allowed to claim $4 thousand per apprentice per year instead of the previous $2 thousand.
- Employer tax credit for mental health coverage: Effective Jan. 1, 2022, employers would be allowed to claim 25 per cent of additional mental health coverage offered under their benefits plan. The tax credit would be permanent, but employers would only be allowed to receive the tax credit for three years.
Liberal Party of Canada
- Extension to Canada Recovery Hiring Program: The proposal includes extending the Canada Recovery Hiring Program until March 31, 2022. This extension would include the same parameters as planned for Period 22. While the program currently subsidizes 50 per cent of new employees’ wages, the extension as per Period 22 would reduce that percentage to 20 per cent.
- Small business tax credit for ventilation upgrades: This tax credit would allow small businesses to claim 25 per cent of the costs of eligible ventilation upgrades up to a maximum of $10 thousand per building and $50,000 per company.
- Canada Small Business Financing Program: Would increase the maximum loan amount from $350 thousand to $500 thousand.
- Tourism industry support: Would cover up to 75 per cent of wage and rent expenses throughout the winter.
- Technology support for SMEs: Microgrants of up to $2,400 would be available to smaller Main Street businesses to support the cost of new technology. Zero-interest loans would be available to SMEs toward the financing of larger technology adoption projects. Providing training for 28 thousand young workers would also aid SMEs looking for help with technology adoption.
- Expensing growth investments: Privately owned, Canadian-controlled businesses would be allowed to immediately expense up to $1.5 million of investments aimed at growing their business (software, patents, and machinery).
- Changes to the SR&ED program: Proposed changes to the program include simplifying the application process, redefining eligible expenses to match with the current innovation and R&D development and practices, and making the program more generous for companies taking the biggest risks.
- Corporate surtax on financial institutions: A three per cent surtax on Canadian taxable earnings of $1 billion or more would be introduced primarily for corporations operating in the finance industry.
- Extending the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS): The CEWS and CERS would be extended from 24 Oct. 2021 to May 31, 2022, for certain industries. Businesses eligible for the extension would include those with at least a 40 per cent revenue loss and would center around the tourism industry (hotels, tour operators, travel agencies, convention centers and festivals). The subsidy rate would be equivalent to the revenue loss (as compared to pre-COVID levels) and would be limited to 75 per cent of losses.
New Democratic Party (NDP)
- Elimination of employee stock options tax credit: all employee stock options granted on or after September 21, 2021, employee stock options would be treated as regular salary when exercised.
- Increase to the corporate income tax rate: the general corporate income tax rate would be increased from 15 per cent to 18 per cent starting Oct. 1, 2021.
- Removal of the Accelerated Investment Incentive for the oil and gas sector: Capital investment by corporations in the oil and gas sector would no longer qualify for the enhanced first-year allowance and would be subject to the Capital Cost Allowance half-year rule starting on Oct. 1, 2021.
- Restrictions to deductibility of internet advertising expenses: Only advertising on Canadian-owned websites and media would be eligible for a tax deduction related to internet advertising expenses.
- Elimination of some deductions for the oil and gas sector: Certain deductions for the oil and gas sector, including the deduction of Canadian development expenses and oil and gas property expenses from taxable income would be eliminated starting on Sept. 30, 2021.
- Transactions with foreign subsidiaries: Starting Sept. 21, 2021, to deduct payments made to subsidiaries from taxable income, corporations would need to show that the subsidiary is carrying out economic activity.
- Introduction of excess profit tax: Canadian corporations that have earned more than $10 million in revenues in at least one year between 2016 and 2020 would be subject to an additional 15 per cent tax on profits.
- Capital gains: Capital gains realized on or after September 21, 2021, would be subject to an increase in capital gains included in taxable income. The portion would increase from 50 per cent to 75 per cent.
- Help for small businesses: These would continue until small business can reopen. There is also a proposed hiring bonus as well as a cap on credit card fees and access to government export services for small businesses looking for new markets.
- Tax rate for small businesses: Under the proposed mandate, the small business tax rate would not exceed 9 per cent.
- Green Venture Capital Fund: A $1 billion dollar fund would be available for environmentally friendly start-ups.
- Support for clean technologies: Businesses adopting clean technologies would receive financial support, as would the retraining of workers in the oil and gas industry.
- Entrepreneurship training: Training would be provided to entrepreneurs, with a focus on minorities struggling when it comes to launching or growing their business.
- Government assistance for small business: Funds would be allocated to helping small businesses, especially the tourism and hospitality industries, recover from the pandemic. Aid would also be available for small businesses looking to adopt digital strategies.
- Regional funding and decision-making: Regional autonomy regarding funding would focus on Quebec rather than on federal decision-making.
- Focus on green initiatives, forestry, agri-food and aerospace: Funding would be centred around industry-specific projects that would highlight Quebec’s most lucrative industries.
People’s Party of Canada (PPC)
- Covid recovery: Covid recovery programs would be phased out and recently announced programs would be reversed.
- Corporate taxes and business subsidies: Overall corporate tax cuts are being proposed for businesses of all sizes once the deficit is paid. The corporate tax rate would be cut from 15 per cent to 10 per cent. All corporate subsidies, including regional development grants, would be eliminated.
- Interprovincial trade: Interprovincial trade barriers would be removed to facilitate the acquisition of goods for small businesses.
- Green technology: The development of green technology would no longer be subsidized by the government and would instead be funded by private investors.
As election day approaches, it is critical for start-ups, SMEs and large organizations to weigh the impact the proposed campaign policies will have on their businesses. Being fully informed is the first step.
*Campaign proposal information is sourced from the Office of the Parliamentary Budget Officer, as well as respective campaign websites. Fundingportal is not affiliated with any political party.