In part II of this blog series, we discussed the Small Business Deduction (SBD) and what constituted eligibility. In this part, we continue to explore the impact of the 2015 Quebec Budget on the small business sector.
What Happens if you Don’t Have the Minimum Number of Employees?
If you don’t meet the minimum number of employees criteria (and you are not in a primary or manufacturing sector) you will still benefit from the reduction of the corporate tax rate. For the 2017 tax year, corporations meeting the eligibility requirements will have a tax rate of 11.8 per cent with a SBD rate of -3.8, bringing the SBD rate to 8 per cent. Those that do not meet the criteria will remain at the 11.8 rate. This structure is designed to allow all small businesses to benefit from a tax reduction, but also to encourage small businesses to grow and create jobs. As the company grows, they are “rewarded” with a higher deduction.
Reduction of the Health Services Fund Contribution Rate
All employers in Quebec, whose payroll totals $1 million or less per year, must contribute to the Health Services Fund at a rate of 2.7 per cent. Small businesses in the service and construction sectors whose payroll is $1 million or less per year will see a decrease in the rate from 2.7 per cent to 2.25 percent from 2017 to 2019.
Here is how it looks, for these employers, by the year/rate:
Get the Most out of the Quebec Budget
Corporate taxes, SMB, SBD, committees, recommendations, and whole lot of statistics and figures – it’s not easy to decode and understand the new Economic Plan, let alone understand the very nuanced and still-complicated world of taxes. It’s no wonder the Committee called for simpler tax laws, and they are not the only Canadians advocating for a sleeker, more streamlined system.
Meanwhile, however, businesses must comply with the current and future tax laws and failure to do to so can result in audits and fines. The new Economic Plan greatly benefits small businesses– and you should take full advantage of those benefits.
A great way to get the most out of the budget is to get professional advice. An accountant can help you understand how to make the budget work for you, all the way up to managing your company’s finances. Imagine the freedom to focus on the parts of the business you know best – while knowing the money side of things is in the hands of professionals.
Here at AF Accounting, we provide several services designed specifically for new and emerging businesses: tax advice and planning, personal tax services and virtual CFO. With the Quebec economy on the rise, now is the perfect time to start or increase the scope of your small business. Contact us today and let us explain how the new Economic Plan benefits you and your company.