Budget 2015 targets manufacturing sector, small business in particular
New budget offers renewed capital cost allowance program, small business tax cut, export opportunity spending, and funds for women and young entrepreneurs.
The Harper government’s 2015 federal budget, released on April 21, puts manufacturing at the top of the agenda, offering some support for Canada’s struggling manufacturing sector but quite a bit more for small business operators – including help for women entrepreneurs and young entrepreneurs.
The new budget includes several programs to woo the manufacturing and exporting sectors, including the gradual reduction of the small business tax rate to nine per cent from 11 per cent on the first $500,000 of profit. The tax cut begins in 2016 and is phased-in over the next four years, culminating in the full two per cent cut by 2019.
Also, $50 million has been budgeted over five years to share the cost of exploring new export opportunities with small and medium-sized enterprises.
Women entrepreneurs will be on the receiving end of tax breaks, beginning with a program to help “connect women with the tools they need to succeed in business,” finance minister Joe Oliver said. The budget suggests these tools could include mentoring and network initiatives, as well as access to $700 million over three years through the Business Development Bank of Canada. The program would also encourage trade missions for women-led companies to widen exposure to international markets.
Young entrepreneurs also get a nod. The budget sets aside $14 million over two years in the already-established Futurpreneur Canada program, to help younger business people access financing and mentoring support, although funding is dependent on matching funds from non-federal sources.
For the manufacturing sector in general, the accelerated capital cost allowance (CCA) program will be extended until the end of 2025. Currently the CCA – which was set to expire at the end of this year – provides a 50 per cent “straight-line” depreciation rate, which allowed a company to claim 50 per cent the depreciation of capital equipment each year. In this program a company could claim 100 per cent of the depreciated value of equipment over about three years. The government says the deferral of tax associated with this new accelerated CCA is expected to reduce federal taxes for manufacturers by $1.1 billion from 2016 to 2020.
For automotive-related manufacturers, the budget plans to provide up to $100 million over five years starting in 2016 to support product development and technology demonstration by Canadian automotive parts suppliers through the new Automotive Supplier Innovation Program. Of this amount, $50 million over three years will be reallocated from the existing Automotive Innovation Fund. Another $50 million over two years will be provided starting in 2018–19. The program will help commercialize research by supporting product development and technology demonstration on a cost-shared basis with participating firms.
On the research and development front, the federal budget proposes more than $1.5 billion over five years to advance science, technology and innovation. $1.33 billion over six years will go to the Canada Foundation for Innovation – a not-for-profit corporation that supports the modernization of research infrastructure at universities, colleges, research hospitals and other not-for-profit research institutions across Canada. Also, $9 million per year will go to the Research Support Fund to support the indirect costs borne by post-secondary institutions in undertaking federally sponsored research. And $119.2 million budgeted over two years, starting in 2015–16, will enable the National Research Council Canada (NRC) to continue to its new role as Canada’s research and technology organization by supporting business innovation initiatives across Canada.