A Comprehensive Look at Canada's Fall Economic Statement 2024

The Canadian Government has released the Fall Economic Statement 2024, introducing new measures and amending existing ones aimed at addressing inflation, enhancing economic growth and improving support for small businesses and individuals. The statement covers a range of topics including personal and business tax, tariff and trade measures, and non-profit organization reporting.

Focusing on personal tax, the government is taking steps to address the rising costs of everyday life. A key measure is the expansion of the capital gains rollover on business investments. Effective from January 1, 2025, this allows individuals to defer capital gains taxation on the disposal of eligible small business corporation (ESBC) shares. The changes extend the period for acquiring replacement shares and expand the types of shares that qualify for this rollover.

Cleo Melanson, commented on this change, saying, "The expansion of the capital gains rollover period and the inclusion of both common and preferred shares will have a positive impact on small businesses. This deferral of capital gains taxation will provide them with better access to capital, fostering growth and innovation."

The statement also confirms the GST/HST holiday tax break, which provides relief to Canadians by reducing the cost of various goods during the holiday period. This initiative is part of the Tax Break for All Canadians Act.

On the business tax front, the government has provided further details on the EV supply chain investment tax credit. This refundable tax credit equals 10% of the capital cost of buildings involved in the EV supply chain, designed to incentivize EV manufacturing. The statement also clarifies and expands the clean electricity and clean hydrogen investment tax credits.

Furthermore, the statement outlines changes to the Canada carbon rebate for small businesses. The design elements and eligibility of the rebate will be modified for the 2024-2025 and subsequent years. "This carbon rebate is a significant step towards supporting small businesses in their sustainability efforts and will help drive the transition to a greener economy," noted Melanson.

Notably, the statement proposes an extension of the accelerated investment incentive and immediate expensing measures. These incentives, which were originally set to phase out in 2024, are now proposed for reinstatement for a five-year period starting January 1, 2025.

The SR&ED program is also set to see enhancements, including raising the annual expenditure limit and extending the enhanced refundable credit to Canadian public corporations. Further reforms are anticipated in the upcoming 2025 Federal Budget.

In terms of tariff and trade measures, the statement announced additional tariffs on select Chinese products and proposed amendments to the Export and Import Permits Act. It also establishes reciprocity as a requirement in federal policies to protect Canadian businesses from unfair foreign trade and economic practices.

Lastly, changes have been proposed for non-profit organizations (NPOs). NPOs with total gross revenues over $50,000 will now be required to file an annual information return. Additionally, a new short-form return will be introduced for NPOs that do not meet the thresholds for filing the annual information return.

In summary, Canada's Fall Economic Statement 2024 presents a comprehensive set of proposals designed to stimulate economic growth, support businesses, and provide relief to individuals. As these measures are implemented, our firm will continue to provide expert guidance and support to our clients in navigating these changes.