Business Tax Changes

Employment Insurance

The one new initiative announced in the Budget that will have a positive effect for small business is the announcement of a "Hiring Credit for Small Business." The Budget proposes a temporary Hiring Credit of up to $1,000 against a small employer's increase in its 2011 EI premiums in excess of the 2010 calendar year. For the purposes of the credit, a small business is an employer whose total EI premiums were at or below $10,000 in 2010.

Employers currently pay 1.4 times the amount of EI premiums withheld from employees pay cheques. For 2010 the maximum EI per employee paid by the employer was $1,046.30 per employee.

The Government also announced that it would take further action to limit the potential increase in EI premiums. Currently EI premiums are scheduled to rise by 10% as of January 1, 2012.

Capital Cost Allowance

The budget announced the extension of the temporary accelerated capital cost allowance treatment for investment in machinery and equipment in the manufacturing and processing sector until 2014. This allows qualifying expenditures acquired before 2014 to claim an accelerated 50% straight-line method of depreciation.

Also announced was the inclusion in class 43.2 (50% declining balance) of equipment designed to generate electricity in a process in which all or substantially all or the energy input is from waste heat.

Corporate Partnerships

The budget introduces a Stub Period, for corporations that are members of partnerships where the fiscal year-end of the corporation differs from the year-end of the partnership. This will eliminate the ability of corporations to structure year-ends creating a tax deferral.