The announcement of a new federal budget is always a moment for small businesses to pay attention. The support of the government is instrumental in creating favourable conditions for local and small businesses to thrive, and 2017 is no different.
Innovation to the Fore
This year, the budget contains provisions that will likely benefit the growth of new businesses. Innovation is the buzzword to watch, and the government is doubling down on its investment in supporting startup businesses. The Liberals have decided to continue the previous government’s venture capital strategy by giving BDC $400 million over the next three years with a focus on late-stage funding.
The budget also proposed to provide up to $50 million for a procurement program, Innovative Solutions Canada, to allow the government to make purchases from Canadian startups. Federal support for training and upgrading skills will be boosted by $2.7-billion through provincial transfers over six years to assist businesses in the push to stay competitive. Budget 2017 also proposes to establish Innovation Canada, a new platform expected to consolidate and simplify a plethora of innovation programmes within the government.
Training and Support
Local businesses whose mandate doesn’t fit the high-velocity model that dominates in startup culture are not left out in Budget 2017. An additional $1.8 billion will be earmarked to expand the Labour Market Development Agreement, with a further $900 million to be allotted to Workforce Development Agreements that will make training, expansion and hiring easier for businesses. The cost of hiring and training new employees can be a major drain on small business resources – these initiatives will help to ease the pressure on business looking for new employees to meet growing demand.
Changing Tax Policy
Two main small business tax measures that are the subject of concern in the 2017 budget; namely, the small business deduction and the lifetime capital gains exemption. Small business owners should confer with their tax professional about the increased scrutiny tax planning strategies will be under, as the government seeks out loopholes to close. Specifically, the government will soon review income-splitting with family members, the tax rates applied to passive investments in a private corporation and the conversion of salary or dividends into capital gains.