How the federal budget affects you

federal budget, balanced budget, Canada, Joe Oliver, small business, entrepreneursIt’s been a month since the Tories released their federal budget. The Economic Action Plan 2015 includes many funding and tax changes, particularly for small businesses.

In fact, many pointed to small business owners as the big winners of the federal budget — mostly due to the planned tax cut, from 11 to nine per cent over the next four years.

But besides the tax cut, how else does this budget affect small businesses? Here’s a breakdown of what to consider over the next few years:

  • Personal taxes: Once fully implemented, the tax cut will result in savings of $10,000 per year. However, these savings will likely be offset by higher personal tax on dividends paid out of small business earnings. When looking at this tax cut, it’s important to account for both corporate and personal taxes. (We’ll be discussing TFSA changes, the family tax, and other personal tax changes next week.)
  • Eligibility: The small business eligibility criteria is changing, meaning you can stay a small business for longer. A small business will soon include a business with gross annual revenues of up to $10 million, rather than capping at the current $5 million.
  • RRIFs: As a business owner, succession planning and retirement should always be on your mind. And it’s important to start early. The Tories will be reducing the amount that seniors are required to withdraw at the age of 71 and at the age of 80. It will then increase at 94 years old.
  • Young entrepreneurs: The budget also earmarks $14 million over two years for Futurpreneur Canada. It comes at a time when Futurpreneur is seeing more young people turn to entrepreneurship than ever. However, this money is conditional on Futurpreneur raising matching funds from non-federal sources.

Stay tuned next week when we discuss personal tax changes, including changes to the TFSA contribution limit and the family tax credit.

Your business and the federal budget

So the Tories released their balanced budget at the end of April. Since then, thoughts and opinions have been flying about the pros and cons of this budget. But what does this mean for you and your small business? At Homeroom, we thought we’d break it down for you in a new series, Your Business and the Federal Budget.

In this series, we’ll delve into:

  • The Budget 101 and the small business tax
  • Why the difference in opinion between the Canadian Federation of Independent Business and economists
  • New changes to the Tax Free Savings Account contribution limit and the family tax credit
  • How the budget affects female entrepreneurs

Keep checking back here, as we’ll be publishing a new post every Thursday. Stay tuned!

#TBT to talking procrastination on the CBC

Homeroom was featured on the CBC’s The National last year to talk procrastination and taxes, following a 2014 study stating that procrastination might be genetic. Besides death and taxes being life’s certainties, putting off doing your taxes during tax season is a close third.

We’re throwing back to this interview as a gentle reminder to keep on top of your taxes and bookkeeping throughout the year. Now that the tax season rush is over, it’s a good idea to keep procrastination at bay so that you’re sitting pretty come tax time 2016.

Check out the interview below.