Sept. 12, 2014, Toronto – The federal government's new job credit is
expected to save small businesses more than $550-million over the next
two years.
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.
“Small
businesses drive Canadian prosperity, representing about 50 per cent of
jobs in the private sector and a third of Canada’s gross domestic
product. That is why we are taking action to make small businesses
stronger," said Joe Oliver, Minister of Finance. Our new Small Business
Job Credit will lower taxes for business owners and make it easier for
them to create jobs for Canadians.”
The government estimates
almost 90 per cent of all EI premium-paying businesses in Canada will
receive the credit, reducing their EI payroll taxes by nearly 15 per
cent. The Canada Revenue Agency will automatically calculate the credit
on a business’ return, ensuring no new paper burden will be imposed on
business owners.
All employers will further benefit from a
reduction in the EI premium rate paid by both employers and employees in
2017 when the new seven-year break-even rate-setting mechanism takes
effect. This will ensure that EI premiums are no higher than needed to
pay for the program over time.
"I couldn’t be more pleased to
stand beside Finance Minister Oliver as he announces half a billion for
small firms in payroll tax cuts – the most harmful form of taxation
affecting job creation and employee wages," said Dan Kelly, president of
the Canadian Federation of Independent Business (CFIB), who joined
Oliver for the announcement. "This will make it easier to hire new
workers or invest in additional training to help entrepreneurs grow
their businesses."
The CFIB estimates the new credit will create 25,000 person years of employment over the next few years.
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