Small businesses across Canada are engines for job creation. They employ roughly half of the private sector labour force and represent about a third of Canada’s gross domestic product. Economic Action Plan (EAP) includes many initiatives to help small businesses succeed including the Small Business Job Credit.
The Small Business Job Credit will effectively lower small businesses’ Employment Insurance (EI) premiums from the current legislated rate of $1.88 to $1.60 per $100 of insurable earnings in 2015 and 2016. Any firm that pays employer EI premiums equal to or less than $15,000 in those years will be eligible for the credit. Almost 90% of all EI premium-paying businesses in Canada will receive the credit, reducing their EI payroll taxes by nearly 15%.
The Small Business Job Credit will be automatically administered by the Canada Revenue Agency, which will calculate the amount of the credit that will be applied against any outstanding debt with the remaining amount, if any, being refunded to the small business. This initiative builds on the many efforts by the government to help small businesses succeed which have included reducing taxes, administrative burdens, and red tape. According to KPMG, Canada now benefits from the lowest total business tax costs among the G-7 countries (46% lower than the United States).
Visit Finance Canada, to learn more about the Small Business Job Credit. If you already own or are looking to start your own business, visit the Economic Action Plan website to learn more about measures to help small businesses.