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Ontario announces small business tax cuts

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Ontario announces small business tax cuts

Ontario announces small business tax cutsIn mid-November, Ontario Finance Minister Charles Sousa announced a new small business tax cut and incentives to hire young workers during his fall economic statement. The announcement comes as small companies struggle to cope with elevated business costs and worry about the province’s impending minimum wage increase. Indeed, business lawyers in Ontario have been busy of late managing their clients’ many concerns.

The announced changes will cut the corporate tax rate on the first $500,000 of profit from 4.5 per cent to 3.5 per cent, effective January 1. Additionally, small businesses employing fewer than 100 people will receive a $1,000 incentive for hiring a person between the ages of 15 and 29, and a further $1,000 for retaining them for six months.

Even with the cut, Ontario will still have the third-highest small business tax rate among the provinces, behind only Prince Edward Island at 4.5 per cent and Quebec at eight per cent. However, the province’s corporate tax rate, which applies to earnings above $500,000, is the second lowest in Canada at 11.5 per cent, trailing only British Columbia.

For the clients of some business lawyers in Ontario, taxes are less of a concern than the minimum wage, which will increase from $11.60 per hour to $14 per hour on January 1, 2018, and to $15 per hour in January 2019. Sousa reinforced this timetable in his speech.

“We will not back down from these commitments,” he said. “An increase to minimum wage cannot wait. People cannot wait. Delaying an increase is denying an increase.”

With provincial elections just over five months away, Minister Sousa’s tax announcement was seen by some as a play for votes. Progressive Conservative finance critic Vic Fideli called it “a pre-election Hail-Mary pass, saying anything to cling to power.” Provincial NDP leader Andrea Horwath complained that no new funds were allocated to addressing high hydro bills or issues in healthcare and senior care.

However, many small business owners are unlikely to be swayed by the Liberals’ outreach.
“I think it shows a total lack of understanding and ignorance about small business,” Fred Luk, owner of Fred’s Not Here and Red Tomato restaurants in downtown Toronto, told the CBC. “For them to offer one per cent to small businesses and restaurants, basically it’s a joke because many of us will not survive.”

If you are small business owner seeking guidance on tax rates or any other legal issue, contact Nanda & Associate’s team of business lawyers in Ontario to learn how we can help. Our team can help you address your business concerns.

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