The Raise of Taxable Capital Limit for Small Business Deduction
Small businesses play a vital role in Canada’s economy and the government has been taking steps to support and grow this important sector. In December 2022, a new bill, Bill C-32, received Royal Assent that brings significant changes to the small business deduction program.
Previously, Canadian Controlled Private Corporations (CCPCs) and any associated corporations were only entitled to the small business deduction if their combined taxable capital employed in Canada was less than CA$15 million. Beyond this limit, the CCPC would not be eligible for the deduction. However, with the new bill, the limit has been raised to CA$50 million, providing more opportunities for small businesses to take advantage of this deduction.
For taxation years beginning on or after April 7, 2022, CCPCs and associated corporations with less than a combined CA$50 million in taxable capital employed in Canada will be entitled to receive the small business deduction. This change has been made to provide more breathing room for small businesses and allow them to grow and thrive without losing access to this important support.
The small business deduction is a valuable tool for Canadian small businesses, allowing them to lower their federal tax rate and keep more of their hard-earned profits. By raising the taxable capital limit, the government is sending a clear message that it is committed to supporting the growth and success of small businesses in Canada.
In conclusion, the raise of the taxable capital limit for small business deduction is a positive step for Canadian small businesses. With this new change, small businesses will have greater opportunities to access the benefits of this important program, helping them to grow and succeed. If you’re a small business owner, make sure to take advantage of this new change and keep growing your business!”