Many businesses sighed a collective breath of relief over Canada’s 2021 federal budget announced Monday. While it’s heavily focused on COVID-19 relief efforts that will see wage and rent subsidies continue into early fall, there’s also a focus on investing to create more jobs and building a more competitive, resilient economy—without the tax increases anticipated by some.
The federal budget looks ahead to a post-pandemic world, addressing the future of work, including the ability to attract and retain talent and create a more inclusive, diverse workforce. At the same time, it provides additional oversight in certain areas to combat tax evasion and profit shifting, and more incentives to write off certain capital expenditures. Unsurprisingly, this includes incentives for investing in clean energy equipment and technology.
The stimulus program focuses heavily on private businesses of all sizes, providing an extension of wage and rental subsidies until September and a new hiring incentive for employers to accelerate growth in a post-pandemic world. This includes hiring and training programs for the next generation of workers, such as increased funding for Canada Summer Jobs, as well as an apprenticeship program and more funding for placements such as co-ops and internships. These initiatives could make it easier for private companies to attract and keep creative young minds.
While the federal budget focuses on climate change incentives, many companies admit they still have work to do in this area, according to our Family Business Survey 2021. But 50% of Canadian family businesses say there’s an opportunity to lead the way in sustainable business practices, which could help attract and retain younger generations—who are a powerful force behind sustainability.
The 2021 federal budget aims to make childcare more accessible to all, and while that’s good news for families, it’s also great news for employers. Better options for daycare could help employers keep more parents in the workplace and make sure they continue to have a seat at the table. While $10-a-day childcare is still a promise rather than a reality, it sets the tone for more inclusion in the workforce.
While there’s an emphasis on spending money to kickstart the economy rather than increasing personal and corporate taxes, we are seeing the federal government tighten the reins in certain areas.
This includes providing more funding to the Canada Revenue Agency to spend on audits and combat abusive tax schemes. There are a few new tax measures of interest, including a tax aimed at foreign owners of residential real estate, reporting requirements for aggressive transactions and measures to fight profit shifting (including new interest deductibility limits) to prevent the erosion of the Canadian tax base. There’s also a proposed tax on luxury vehicles, boats and aircraft. It’s important for individuals and businesses to be mindful of these changes and their impacts.
We still don’t know what the next normal will look like. At the very least, these new restrictions and requirements should be considered as part of a company’s long-term strategy, along with recruiting younger talent and retaining parents in the workforce.
The 2021 federal budget doesn’t attempt to rock the boat—perhaps because there’s speculation an election will be triggered later this year. Some are questioning whether the new luxury tax is a sign of what’s to come. Will more tax measures be coming your way in a post-election, post-pandemic world? And are you prepared?
Interested in how the federal budget will affect your business and how to prepare for a post-pandemic recovery? Contact us to learn more.
Supporting an inclusive workforce:
It’s focused on the future of work, with supports to help the next generation of workers. A new childcare plan could help retain parents in the workforce, further boosting inclusion and diversity.