What Canada's small businesses need from a potential spring budget

A non-binding vote that called for the federal government to deliver an economic update or budget before parliament rises later this month may or may not result in its delivery.

The prime minister and finance minister have said that spending plans would not be set out until the fall, but Conservatives and others say that the state of the economy and the nascent government’s plans to improve it should be addressed now.

The Canadian Federation of Independent Business says that there are several urgent matters that small businesses need sooner rather than later, including five priorities:

1. The tax status of the $2.5 billion small business carbon rebate delivered in December (CRA says it is taxable until government introduces a change).
2. Changes to and delivery of the $623 million small business carbon rebate for 2024/25 (the FES proposed a new formula and government is now sitting on the rebates).
3. A legislative change to allow businesses to qualify for the earlier carbon rebate by filing their returns for those years before Dec. 31, 2024.
4. A bump in the Lifetime Capital Gains Exemption (LCGE) to $1.25 million backdated to June 25, 2024 (introduced but not passed, promised by Prime Minister Carney too).
5. The fate of the new Canadian Entrepreneurs' Incentive (backdated to Jan. 1, 2025) to lower the inclusion rate to 33% on a lifetime maximum of $2 million in eligible capital gains.

CFIB president Dan Kelly says that these measures should already have been implemented but that they were delayed due to the filibuster, prorogation of parliament and election. 

“A budget would provide the window for government to introduce the legislation, which should all be ready to go from the last parliament,” he said. “Without action, small businesses filing their 2024 taxes in June are required to pay corporate income tax on their share of the $2.5 billion carbon rebate they've already received and spent. Then, CRA is suggesting 600,000 small business owners file an amendment to get the tax back when the legislation change is made. This makes no sense at all.”

Kelly added that addressing the “massive economic and trade uncertainty facing SMEs” by providing them with certainty on these tax measures is essential.