With a federal election coming in 2015, it’s no surprise that this year’s federal budget did not include any significant tax breaks. Although it is largely considered to be a “stay the course” budget, business owners in Ontario will still be interested in some measures and tax changes in this year’s budget, including new funding for apprentices and interns, changes to remitting employee source deductions and investment in clean energy.
In the budget, the government pledged more funding for apprenticeship or internship programs. Specifically, the government announced $40 million to its Canada Accelerator and Incubator Program over four years, with another $40 million for up to 3,000 internships in highdemand fields and $15 million a year for up to 1,000 internships in small and medium-sized businesses.
This program is intended to help entrepreneurs create new companies and provide mentoring and other resources.
If your business doesn’t already have an apprenticeship or internship program, you could consider implementing one in light of this new announcement of more funding.
In addition to these new budget announcements, it appears that the Canada Job Grant program to businesses is offering up to $15,000 per person for training for an existing or better job. This funding, announced in the 2013 federal budget, may also be available soon.
The government also proposed to relax the thresholds for remitting source deductions for employees’ income tax, Canada Pension Plan contributions and Employment Insurance premiums.
You will have to remit up to twice a month if you have average monthly withholdings of $25,000 on your payroll, while you will have to remit up to four times a month if you have average monthly withholdings of $100,000 on your payroll. Previously, these thresholds were $15,000 and $50,000, respectively.
If you invest in clean energy, the budget’s announcement of a tax reduction for certain types of clean energy generation and energy efficiency equipment may be welcome news. The government intends to extend the accelerated capital cost allowance (CCA) rates to apply to certain water-current energy equipment and equipment used to turn eligible waste fuel into gas.
Ontario business owners considering buying or selling a business including goodwill or other intangible assets in the near future may want to expedite the transaction or wait until the government concludes its consultation on its new plan to replace the current eligible capital property rules with a new CCA class approach.
When this change is implemented, your eligible capital property pools will be transferred to a CCA class which could affect the tax implications of buying or selling goodwill and other intangible assets, depending on when these rules take effect.
As a result, under the proposed changes, the sale of goodwill by an Ontario Canadian-controlled private corporation could be subject to a 10 per cent or higher tax cost than under the current eligible capital property rules.
The government intends to hold a consultation on how it will implement this change. It’s unclear when the new regime will be enacted.
While the federal government may be saving most of its crowd-pleasing surprises until next year, Ontario business owners may still be able to benefit from tax savings in this year’s budget. Although perhaps not as noteworthy as in some previous years, these changes could still result in a smaller tax business bill or a reduced compliance burden for your business as you start to consider your tax situation for 2014.
Next year, if the government balances the budget as projected, we could see new tax incentives such as family income splitting, increased limits on tax free savings accounts (TFSA) and enhanced fitness tax credits.