Managers Tian Pham, left, and Henry So serve customers at the family-owned Riverside Market in Toronto.Melissa Tait/The Globe and Mail
More companies will be able to benefit from the preferential tax rate for small businesses under changes outlined in Thursday’s federal budget.
Small businesses are taxed 9 per cent on the first $500,000 of their income, which is lower than the general corporate tax rate of 15 per cent. But under current rules, the benefit starts to phase out for businesses with capital of more than $10-million, and is gone for those with more than $15-million.
The budget proposes to raise the ceiling so businesses can continue to benefit from the small-business tax rate even if they have capital of up to $50-million.
The measure is expected to cost the government $660-million in lost revenue over five years.
Dan Kelly, president of the Canadian Federation of Independent Business, said his members will welcome the tax break but otherwise said the budget was a missed opportunity for indebted businesses.
The budget did not suggest COVID-19 support programs, such as the Canada Hiring Recovery Program, which subsidizes wages for some employers, could be extended again beyond their expiration on May 7.
And the government delayed action on lowering the fees that credit-card companies are allowed to charge merchants for processing transactions. Small businesses have said the costs of processing such payments has risen even more during the pandemic, as fewer customers used cash.
The government has said twice – in the 2019 election and the 2021 budget – that it would cap fees. Thursday’s budget reiterated the promise and said Ottawa will continue consultations with stakeholders.
“Nobody could accuse the government of moving at a breakneck pace on this,” said Karl Littler, senior vice-president of the Retail Council of Canada. He said he hopes the government will act later this year.
Personal Finance columnist Rob Carrick highlights how the 2022 federal budget aims to counter inflation. A break for families comes in the form of dental care for those making less than $90,000 a year. And a new tax-free savings account for first-time homebuyers is aimed to be an on-ramp into the hot housing market.
The Globe and Mail
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