On March 22, 2017, the Federal Government released its much-anticipated Budget 2017 entitled “Building a Strong Middle Class”. The budget, which was billed to the public as an innovation themed budget proved largely underwhelming for the business community. Indeed, the modest tax changes in Budget 2017 indicate that the government is in wait-and-see mode, looking at the potential changes in the United States (deregulation, reduction in corporate taxes) that may put Canada at a serious competitive disadvantage. The budget deficit will reach 28 billion this year before declining to 21 billion in 2020. There seems to be no plan to balance the budget and this leaves Canada vulnerable giving us less fiscal room to maneuver in the event of a downturn. With such large deficits being run the big question is, have we seen results? With modest growth in the Canadian economy and nearly no export growth in the past two years, it appears this budget will keep Canada in the low-growth trap.
Small business is likely to see minimal impact as a result of this budget, here are a few key points that may be of interest:
Ending Billed-Basis Accounting for Professionals – Eliminate the use of billed-basis accounting for income tax purposes by a limited group of professionals (accountants, dentists, lawyers, medical doctors, veterinarians and chiropractors) having significant short term impact on the affected tax payers.
Strategic Innovation Fund: $1.26 billion over five years to consolidate and simplify business innovation programming. This includes the Strategic Aerospace and Defence Initiative, the Technology Demonstration Program, and the Auto Innovation Fund. There is actually an extra $200 million over three years in new funding.
Venture Capital Catalyst Initiative: $400 million over three years through BDC for latestage venture capital available to young, established businesses with revenues to help them scale up
Canada infrastructure bank: The government will invest $35 billion over 11 years using loans, guarantees and equity. The government says these investments will focus on large, transformative projects, such as regional transportation networks and electricity grids. The government hopes to have the bank operational in 2017
Additional funding for training programs: Budget 2017 will invest $1.8 billion over six years to expand EI training programs under the Labour Market Development Agreements. The government will also broaden worker eligibility for these programs. The concern is that these investments are mainly funded by EI premiums which will likely see an increase.
Innovative Solutions Canada: will commence next year, modelled on the U.S. Small Business Innovation Research program. A portion of the $50-million funding from federal departments and agencies will be allocated towards early-stage research and development, late-stage prototypes and other goods and services from Canadian innovators and entrepreneurs
Read the following publications for more information on Budget 2017
Ontario Chamber of Commerce: Budget 2017 – A Time for Caution