With a growing entrepreneurial drought across Canada, the Canadian Federation of Independent Business (CFIB) is calling on the federal government to follow the lead of provinces by making changes to the small business corporate tax rate.
At 9%, the federal rate hasn't changed since 2019, notes CFIB.
Since then, five provinces -- Ontario, Quebec, Newfoundland and Labrador, Prince Edward Island and Nova Scotia -- have made progress in reducing their corporate tax rates on small businesses, it said. Also three provinces now have higher thresholds (Saskatchewan and PEI at $600,000 and Nova Scotia at $700,000), it added.
In a new analysis published on Wednesday, CFIB is also pushing back against several myths around the Small Business Deduction (SBD), including claims that it discourages business growth, misallocates capital, or primarily benefits rich shareholders.
CFIB is calling on the federal government to lower its rate from 9% to 6%. In addition, the $500,000 small business threshold should have been raised to over $700,000 by now just to keep pace with inflation. Parliament's Industry Committee recently recommended it be raised to $1 million in order to enhance Canada's productivity.
"The small businesses tax advantage is a strength, not a flaw, of Canada's corporate tax system, said Simon Gaudreault, chief economist and vice-president of research at CFIB. "It helps small firms reinvest, create jobs, and cope with the higher costs of being small."