Now that the new federal Liberal government’s first budget has been introduced, we can focus our attention on those measures that actually have been put forward rather than on those that everyone speculated might be put forward.
This is particularly the case with entrepreneurs, where it was feared that the small business deduction would be eliminated for many businesses engaged in providing services. The good news is that the small business deduction has not been eliminated for these businesses, but the bad news is that it has been significantly limited.
As most entrepreneurs are aware, a Canadian-controlled private corporation engaged in an “active business” (which includes the provision of services) is entitled to a small business deduction for its first $500,000 of annual active business income.
In Ontario, the combined federal and provincial corporate tax rate on qualifying income is 15 percent. This represents a significant deferral.
