Most small firms cannot clear the $1 million revenue bar Ottawa set for tariff relief
Business-owner clients head into Budget 2026 on November 5 with a 9 percent federal small business tax rate, a $500,000 small business deduction threshold frozen since 2008, and tariff support programs most of them cannot apply for.
Finance Minister François-Philippe Champagne set the budget date in an October 20 media advisory from the Department of Finance Canada.
The Canadian Federation of Independent Business wants the federal small business tax rate reduced to 6 percent from 9 percent, the deduction threshold raised to at least $700,000, and the threshold indexed to inflation, according to the federation’s budget release.
The same release asks Ottawa to lift the GST/HST registration threshold to at least $60,000 from $30,000, unchanged since 1991, and the Canada Pension Plan basic exemption to $7,000 from $3,500, unchanged since 1998.
“The federal tax rate has been stuck at 9 percent since 2019. It’s time Ottawa improved Canada’s tax system, and that starts with cutting taxes for small businesses,” said Dan Kelly, CFIB president, in the release.
CFIB analysis cited in the release puts the share of small business deduction claimants with income at the current threshold at about 0.4 percent.
“Very few businesses sit near the threshold, and many of those that do tend not to stay there year after year and actually often speed up their investments, not hold back,” said Simon Gaudreault, CFIB chief economist and vice-president of research.
More than two months after US Section 338 tariffs took effect on August 22, many small businesses remain ineligible for federal tariff support programs, CFIB said.
The federal Regional Tariff Response Initiative was expanded on September 8, though most regions still require applicants to have at least $1m in annual revenue.
“More than 50,000 small firms are caught in the trade crossfire, and it is deeply unfair that most are deemed too small to qualify for tariff relief available to larger firms,” Kelly said.
The federation wants Ottawa to return counter-tariff revenues to businesses directly affected by the US-Canada trade war.
It also wants lower Employment Insurance premiums for smaller employers, letting them pay the employee amount on total wages under $600,000, and a lower capital gains inclusion rate for small firms of 33 percent on the next $2 million of gains beyond the Lifetime Capital Gains Exemption.
The Conference for Advanced Life Underwriting asked Finance Canada to update RRSP, RRIF and TFSA rules to better support the financial needs of those saving for retirement and retirees, in a submission published on September 3.
CALU also recommends Ottawa begin its promised review of the corporate tax system and simplify the Tax on Split Income rules.
The Parliamentary Budget Office projects a deficit of $63.3bn in 2026-27 and $67.8bn by 2030-31, $9.5bn above its June forecast, in its Economic and Fiscal Outlook of October 2026.
The PBO projects the government will meet its operating budget anchor in 2028-29 with a surplus of $6.2bn, and will not meet its second anchor of a declining deficit-to-GDP ratio.
