OTTAWA - Small business got a boost in the federal budget with a break on employment-insurance premiums and an extension of a program to buy new equipment.
The moves are in addition to the billions in corporate tax cuts already announced that Finance Minister Jim Flaherty has defended as a cornerstone of Ottawa's economic recovery plan.
"Our tax cuts are also helping employers to invest, grow and create jobs," Flaherty said.
Small business will receive a one-time credit worth up to $1,000 to offset increases in employment-insurance premiums. The credit, which the government estimated would affect 525,000 small businesses, will offset the increase in employment-insurance premiums in 2011 compared with those paid in 2010.
"The measure will reduce payroll costs for new jobs and encourage hiring," Flaherty said in his budget speech.
However, corporate Canada will pay more in some areas.
Changes in the way partnerships work that previously allowed for the deferral of corporate tax is expected to yield $470 million for the government in 2012-13 and increase to $850 million in 2013-14.
"Sound fiscal policy requires that we protect the integrity of the tax system," the minister said.
"We will keep taxes low, while taking action to close unfair tax loopholes that allow a few businesses and individuals to take advantage of Canadians who pay their fair share."
Changes in the rules governing the way dividends are paid between corporations are also expected to bring in $75 million in the 2011-12 fiscal year and increase to $95 million in 2012-13.
The government is also changing rules that will increase taxes on companies building oil-sands projects in a move that will bring the rules in line with the rates charged on conventional oil and gas projects.
The government expects to gain $15 million in its 2011-12 fiscal year from the change, forecast to grow to $30 million in 2012-13.
The minister also extended a program that was set to expire in 2012 to 2014 that allows companies to write off the cost of new equipment and machinery in just two years, faster than normally allowed.
The government also expanded the list of equipment allowed under the rules to include green-energy power equipment such as fuel cells, solar panels and high-efficiency cogeneration equipment.
"This will help businesses and exporters to invest, improve productivity and stay competitive," Flaherty said.
"It will benefit a broad range of industries, including pulp and paper, primary manufacturing, computers and electronics, and the automotive industry."
The federal government will also give Atomic Energy of Canada Ltd. $405 million in its 2011-12 fiscal year to help the crown corporation, which it is restructuring.
The cash will be used to cover losses and support operations including securing the supply of medical isotopes.
