Finance Minster Joe Oliver announced last week that small businesses in Canada will receive $550 million CAD ($500 million USD) in rebates for their employment insurance premiums.
Businesses will receive the rebates, known as The Small Business Job Credit, over the next two years in order to help them increase the number of employees they hire. The credit lowers insurance premiums about 15% to $1.60 per $100 of insurable earnings as of Jan. 1, down from the current rate of $1.88 per $100.
The rebates will be applied when businesses file their taxes. In addition to the rebate, small business health plans such as Tax-Free Health Spending Accounts (THSAs) help small business owners and employees write off their out-of-pocket healthcare as a tax-free business expense — another government savings.
Dan Kelly, president of the Canadian Federation of Independent Business, called the move “big, big news,” estimating that it would create 25,000 person years of employment in the next couple of years.
Oliver, speaking to employees at a flooring company in Toronto, also promised “a substantial reduction” in the legislated employment insurance rate in 2017 that will allow the program to break even and would include a tax cut after balancing the budget next year.
The employment insurance program offers employment insurance to provide some income to qualified workers who lose their jobs. It receives its funds through premiums paid by workers and employers.
Additionally, the Conservative-led government, which has cut taxes several times since taking over in 2006, has recently projected that it will have a surplus of $6.4 billion CAD in the 2015-2016 fiscal year.
This estimate is good for the small businesses that drive Canada’s economy, considering that as many as 98% of businesses (or 1.1 million) in Canada consist of 100 or fewer employees.
A recent article in The Globe and Mail recently narrowed down 10 “remarkable” small businesses in the country, ranging from a mobile yarn sales truck to the only woman-owned and operated plumbing company on Canada’s east coast.
The feature helped put faces to names for the small businesses that help Canada’s economy thrive. These and others can take advantage of the government’s new tax credit.