Proposed provincial law cuts tax rate for businesses

This is the provincial government's fourth consecutive tax cut since 2015

Proposed provincial law cuts tax rate for businesses
Amid the debate on the proposed changes to Canada’s federal tax system, the government of New Brunswick has taken a step further in helping small local businesses by introducing two new measures related to corporate income tax rates and retirement savings.

The first legislation is aimed at lowering the small business corporate income tax rate to 2.5%. This will commence in April next year. This has been the fourth consecutive tax cut in the province since the start of 2015. At that time, the tax rate sat at 4.5%.

“New Brunswick’s small businesses are crucial to our economic growth and creating jobs in our province,” Finance Minister Cathy Rogers said, stressing that this move will help businesses compete, invest, and create more jobs.

Also Read: Canada urged to keep up with US tax cut plans

Meanwhile, the second proposed legislation aims to reduce the burden of operating a pension plan. Dubbed as the Pooled Registered Pension Plans Act, this law was introduced to help self-employed workers and employees of
small business save for retirement through Pooled Registered Pension Plans (PRPP).

Rogers said the act has provisions allowing a worker to join PRPP and make contributions to a pension fund if they are self-employed or if their employer does not provide a pension plan. Employers are also allowed to contribute voluntarily.

Since the employee contributions are pooled, the plan comes with lower administration costs. With this, Rogers said small and medium-sized businesses can attract potential employees and retain existing members of the fund.

“We understand the financial challenges that many New Brunswickers face in retirement. This act will allow for an additional instrument to New Brunswickers for pension planning that is low-cost to both employees and employers," she said.

The Financial and Consumer Services Commission CEO Rick Hancox said this law will help many self-employed New Brunswickers who do not have access to a workplace pension. The commission contributed to the proposed legislation.

"As a result, many of these New Brunswickers may see their standard of living drop significantly during their retirement years. PRPPs will make retirement saving accessible for every working New Brunswicker," he said.

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