Our review of the 2015 Federal Budget, released on April 21, 2015, revealed the following five initiatives that provide opportunities for increased profitability in your business:
1. Reduction of the small business corporate tax rate from 11% to 9% over the next four years.
To ensure small corporations ($500,000 or less in sales) receive this benefit, these cuts will be guaranteed by law. Some examples of savings:
- Net yearly taxable income of $30,000: $1,500 in tax reductions over four years
- Net yearly taxable income of $500,000: $25,000 in tax reductions over four years
2. Significant reductions in credit card processing fees and new rules to ensure fairness in the payments industry.
Earlier this year, Visa and Mastercard promised significant reductions to merchant fees. Key changes were passed, ensuring that reductions will be passed along to small businesses, including the following:
- Merchants will be able to opt out of their contracts if their payment processor raises rates or doesn’t pass on savings from Visa/MasterCard.
- The entire code will now apply to mobile payments.
- Payment processors can only auto-renew a contract for up to six months, enabling merchants to switch to more beneficial contracts.
3. Major changes at the Canada Revenue Agency, including less frequent tax remittances for new firms, a commitment to honour all written advice (including the CRA website) and a new CRA forum with CFIB.
Currently new businesses need to remit monthly for one year before becoming eligible to remit source deductions quarterly. Beginning in 2016 new employers with remittances under $1,000 per month will be eligible to remit quarterly provided they keep a perfect compliance record.
4. Confirmation of reductions
A new rate setting mechanism will be implemented in 2017, which is expected to result in a 21% reduction in the EI premium rate, from the current employee rate of $1.88 per $100 of earnings to $1.49 per $100 of earnings. Employer contributions would be reduced from $2.632 per $100 of earnings down to $2.086 per $100 of earnings.
5. Accelerated Capital Cost Allowance (CCA) for manufacturers extended for the next 10 years.
This is a write off used to encourage product-enhancing investment spending in the manufacturing sector that was first introduced in 2007 but due to expire in 2015.
For questions or clarification regarding these or any other portions of the recently released 2015 Federal Budget call your Five Star Senior Accountant today at (204) 927-7111!