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7 Ways Small Businesses Will Be Affected by Budget 2016

(Photo Credit: jmweb7/iStock.com)

We’ve had a week to let the federal budget sink in and to read about how it will affect our finances in the year ahead. For small business owners, unfortunately, there’s not a whole lot to celebrate when it comes to Budget 2016.

Innovation is certainly the buzzword of the budget, which means there is hope for certain smaller businesses to get some of the support they need. But to find the benefits, you have to read between the lines.

Here are seven things to know if you’re one of the 3.5 million small businesses in Canada.

Your tax rate is frozen

Taxes for small businesses were expected to drop from 11 to 9 per cent for the first $500,000 of qualifying income over the coming years — the Liberals are capping that at 10.5 per cent instead, which breaks one of their campaign promises.

There will be a budget for investing in youth employment

The government will invest $165.4 million in addition to the $339 million previously announced for the Canada Summer Jobs Program, which small businesses can take advantage of. “The program provides funding to not-for-profit organizations, public-sector employers and small businesses with 50 or fewer employees to create summer job opportunities for young people aged 15 to 30 years who are full-time students intending to return to their studies in the next school year.”

Look forward to improved internet access for rural communities

The Liberals will increase “high-speed broadband coverage by investing up to $500 million over five years, starting in 2016–17, for a new program to extend and enhance broadband service in rural and remote communities.” This could create further opportunities for small businesses in the digital economy in Canada’s more remote regions.

There’s an emphasis on accelerators and incubators

Accelerators and incubators are made for fledgling businesses. The government will “develop a performance measurement framework for business accelerators and incubators in Canada. This framework will enable these organizations to benchmark their performance and drive improvement, help companies to choose their best options for support, and assist governments at all levels in increasing the effectiveness of public investments in this area.”

The Liberals extend support for innovation and growth of small businesses

They’ll be funding the National Research Council’s Industrial Research Assistance Program with an additional $50 million in 2016-17 “to increase the number of companies served by the program’s highly qualified industrial technology advisors nationwide.”

Money will be available for innovation networks and clusters

If you have an innovation-based small business, you’re in the money for the next few years. “Budget 2016 proposes to make available up to $800 million over four years, starting in 2017–18, to support innovation networks and clusters as part of the Government’s upcoming Innovation Agenda.”

Small business tax breaks are only for actual small businesses

In order to deal with loopholes in our tax system, Prime Minister Justin Trudeau proposes to “prevent business owners from multiplying access to the $500,000 small business deduction using complex partnership and corporate structures.” Cold comfort, perhaps.

Those are the biggest factors affecting small business in this year’s federal budget. While many see the small business sector as being hit hard by this news, according David Steinberg in The Globe and Mail: “This budget will help the government achieve its objectives, without significant pressure on – or benefit to – small business.”