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Income Tax Deductions For Canadian Small Businesses:  An Introduction To Small Businesses

Income Tax Deductions For Canadian Small Businesses:  An Introduction To Small Businesses

Published by Programme B

Small Businesses. Every and any town has hundreds of these and forming a major block of the business world. All of these Businesses operate in different industries and fields, yet almost all of them have to worry about the same things: Employee Satisfaction, which decides how a company functions, and how enthusiastically work is done; The Proper Payment of Employees, to make sure that they have no complaints, and expenses such as Small Business tax, types of which are imposed on every industry by the Government.

Basically, Small Businesses are what make up the most of the Business world, but they have to face fierce competition and challenges in order to keep operating, as the Business area is not easy for those new to it. Even discounting competition, there is the simply massive challenge of different types of income tax, a challenge that got altered significantly in 2019 with the income tax deductions.

2018: An Average Year For the Canadian Business Sector

2018 was an average year for the Canadian Business sector, and while industries and the market did see some growth during the year, it fell quite short of the expected market growth of 3%, out of which maybe 1.5% was achieved. This is one of the major reasons why the Canadian Government decided that the Business sector needed some help. Many tax changes were made which, so far, have seemed to almost revitalize the entire Business world of Canada.

The reason for this sudden revitalization is the fact that Small Businesses find it much easier to operate if there is financial freedom present in the industry, something the Government has tried to provide in the recent income tax deductions.

Financial Freedom, And What It Means for Businesses

Financial Freedom is known to be what keeps many Small Businesses from achieving their full potential, as the most common case found is that Small Businesses do not have the proper funds they need in order to expand their businesses, and thus sometimes miss out capitalizing on recent trends, crazes, and market fancies. Income tax as one may imagine is one of the things that serve to restrict the Financial Freedom of a company, as one has to pay income tax for every single dollar earned.

The Reduction in Small Business Tax Rate

Recently, the Government of Canada has been trying to take steps in order to relieve some of the pressure presents on Small Businesses, and one of the very first steps they took in 2019 is to reduce the Small Business Tax Rate, something that did what it was supposed to, to the surprise of many people. With the reduction in Income Tax now in place, quite a lot of companies have expanded Financial Freedom, and have used this opportunity to expand their markets, upgrade their equipment and grab other such opportunities for investment.

At the beginning of 2019, The Canadian Government reduced the Small Business Tax Rate from 10% to 9%, which while sounding insignificant, still results in prolific savings for quite a lot of companies.

Carbon Tax: The Best of Them All

Carbon Tax can be called the most prolific step the Government took to relieve the pressure present on Small Businesses. Carbon Tax was implemented on April 1st, 2019, and is being enforced by the Government, since there is a special kind of fine or tax present for those companies who have not adopted Carbon Tax, or any other type of Carbon pricing system. For Small Businesses, Carbon Tax has a lot of benefits, with most of them being centered around three main changes to the tax system of Canada. Read on to find out more about the three central changes made by Carbon Tax:

It allows Businesses to write off the full cost of machinery, and the different kinds of equipment used for the manufacturing and later processing of goods.

This has proven to be a large point for Small Businesses which focus around manufacturing, as the whole idea, and practical application, of upgrading your machinery just got a whole lot easier. Quite a lot of companies used this opportunity to get better machinery for the manufacturing and processing of goods.

It allows Businesses to write off the entire cost of clean energy equipment (specified beforehand)

This is a step taken by the Government which had a different aim in mind: to reduce the burning of fossil fuels and to eventually reduce the emission of carbon gas into the environment. Thus, the Government makes it easier to procure clean energy equipment that does not rely on the burning of coal, petrol or other such fossil fuels. Regardless of the reason, it is a good opportunity for firms in Canada.

The Carbon Tax has many other benefits for different types of Businesses in Canada but has met with some resistance in some regions of Canada, since it also makes many other changes and puts restrictions on the burning of fossil fuels.

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