Canada will see its tax rate drop from 10.5% to 9% over the next 2 years. Originally promised during the 2015 election, Prime Minister Trudeau held out on the decrease for a year before criticism led him to execute the rate decrease. According to Bloomberg, the “rate will be lowered to 10 percent by Jan. 1 and again to 9 percent at the start of 2019, from today’s 10.5 percent.”
, Trudeau and Finance Minister Bill Morneau said Monday at an event near Toronto.
“The tax cut will be worth about C$2.9 billion ($2.3 billion) through the fiscal year ending in March 2023, according to a government background document. A watchdog report previously found that Trudeau’s initial decision not to reduce the rate would add C$2.2 billion to government revenue over five years.” With this give and take, the government will now look elsewhere for federal revenue. Finance Minister Bill Morneau sought to cut rates in other areas but was met with backlash. The issue for Moreneau seems to be that while ideas such as restricting passive income or “investments made within privately held corporations that gave the owner a better tax rate” was aimed at large corporations, it ultimately had a big effect on small business owners as well.
The new tax rate decrease has been praised by Canadian conservatives.
The Canadian Federation of Independent Business, which had been critical of Morneau, agreed. “We certainly are supportive of the reduction in the small business tax rate,” said CFIB President Dan Kelly. “Clearly they recognized at the very end of this process that they needed to do something substantive, that they were taking too big a political hit for this.”
For those looking to open a business in Canada, the next few years seem to be perfect opportunities to do so.