The federal government’s 2024 Fall Economic Statement introduces new measures and updates aimed at fostering economic growth and supporting Canadians in various sectors. Here, we highlight the key takeaways relevant to businesses, individuals, and nonprofit organizations (NPOs).
For Businesses
Reducing Credit Card Fees for Small Businesses
The government has announced measures to lower credit card transaction fees for small and medium-sized businesses (SMBs). The new rates, which came into effect October 19, 2024, will help more than 90 per cent of credit card-accepting businesses in Canada see their interchange rates reduced by up to 27 per cent. This initiative is designed to reduce financial burdens, enabling SMBs to invest more in their operations and growth.
Canada Carbon Rebate for SMBs
SMBs will benefit from the newly expanded Canada Carbon Rebate, which offers targeted relief on carbon pricing expenses. The statement outlines certain elements and eligibility of the Canadian carbon rebate for the 2024-2025 and later years will be modified with more clarification on eligible entities.
Clean Electricity Tax Credits
Aimed at encouraging greener energy solutions, the Clean Electricity Tax Credits will provide businesses with financial incentives for transitioning to renewable energy sources, such as wind and solar power.
Extension of the accelerated investment incentive
The accelerated investment incentive provides an enhanced first-year capital cost allowance for most depreciable capital property. The 2024 statement proposes to reinstate these incentives for a five-year period starting Jan. 1, 2025, effectively reversing the phase out that began in 2024.
SR&ED Tax Incentive Program Updates
Following consultations held earlier this year, the government is proposing the following enhancements to the SR&ED program effective on or after Dec. 16, 2024:
- Raise the annual expenditure limit from $3 million to $4.5 million for the enhanced 35 per cent investment tax credit for CCPCs.
- Increase the prior-year taxable capital phase-out thresholds for the enhanced credit from $10 million–$50 million to $15 million–$75 million.
- Extend the enhanced refundable credit of 35 per cent to Canadian public corporations, replacing the current 15 per cent non-refundable tax credit.
The 2024 statement also proposes to restore the capital expenditure eligibility for SR&ED program deductions and investment tax credits, applicable to property acquired on or after Dec. 16, 2024.
Further SR&ED reforms, including updates to qualified expenses, as well as plans to implement a patent box regime to encourage intellectual property development will be detailed in the upcoming 2025 Federal Budget.
Capital Gains Rollover for Business Investments
New rules for capital gains deferrals allow business owners to reinvest proceeds from the sale of a business into another qualifying business without immediate tax consequences, promoting entrepreneurship and reinvestment.
For Individuals
Canada Disability Tax Exemption
Changes to the Canada Disability Tax Exemption make it more accessible, with updated eligibility criteria and higher deduction limits for individuals living with disabilities.
Canada Carbon Rebate Rural Supplement
Rural residents will see increased payments through the Canada Carbon Rebate Rural Supplement, recognizing the unique challenges of higher transportation and energy costs in remote areas.
Northern Residents Deductions
Enhancements to the Northern Residents Deductions aim to provide greater tax relief for those living in Canada’s northern regions, addressing higher living costs.
Capital Gains Rollover on Investments
The Income Tax Act (ITA) allows individuals to defer capital gains taxation realized on a qualifying disposition of eligible small business corporation (ESBC) shares. Under the current rules, this deferral applies to the extent that the proceeds of disposition are used to acquire replacement ESBC shares within the year of disposition, or up to 120 days following that year.
Effective for transactions on or after Jan. 1, 2025, the 2024 Statement proposes to expand the relevant period to acquire replacement shares to include the entire year of disposition and the entire following calendar year.
The types of shares which qualify for this rollover will also be expanded. Currently, the shares must be common shares issued by an ESBC to an individual where the total carrying value of the assets of the ESBC and related corporations does not exceed $50M immediately before and immediately after the share was issued. Under the proposal, both common and preferred shares will qualify. Furthermore, the limit of the carrying value of the assets of the ESBC and related corporations will be increased to $100 million.
This expanded rollover will help small businesses access capital through the deferral of capital gains taxation for its investors.
Canadian Entrepreneurs’ Incentive
New tax credits and grants under the Canadian Entrepreneurs’ Incentive aim to support start-ups and small business owners, fostering a culture of innovation and self-employment.
Affordable Housing Measures
The government continues to address housing affordability with increased funding for first-time homebuyer programs, rental incentives, and affordable housing construction projects.
Tax Break for Canadians
A temporary sales tax freeze on essential goods is proposed from December 14, 2024, to February 15, 2025. This measure aims to alleviate financial pressures during the holiday season and into the new year.
For Nonprofit Organizations (NPOs)
Changes to Reporting Requirements
The ITA provides an exemption from income tax for organizations that meet the definition of a non-profit organization (NPO). Under the current rules, NPOs are required to file an annual information return if:
- its passive income in a fiscal year exceeds $10,000,
- its total assets at the end of the preceding fiscal period exceeds $200,000, or
- an information return was required to be filed for a preceding fiscal period.
The 2024 statement proposes changes to require NPOs with total gross revenues over $50,000 to also file the annual information return
New Filing Requirements for Small NPOs
For those NPOs that do not meet the above thresholds for filing the annual information return, the government is proposing to introduce a new, short-form return which will require NPOs to submit basic information including:
- The NPO’s business number or trust number,
- The NPO’s name and mailing address,
- The names and addresses of the NPO’s directors, officers, trustees, or similar officials,
- A description of the NPO’s activities, including whether it conducts activities outside of Canada,
- The NPO’s total assets/liabilities and annual revenues, and
- Other prescribed information.
Both measures would apply to the 2026 and subsequent taxation years.
How This Impacts You
Whether you’re an entrepreneur, a professional, or managing an NPO, these updates present opportunities for financial relief and growth.
Virtus Group is here to help you navigate these changes and maximize the benefits available to you. Contact your Advisor to discuss how we can assist you in adapting to these updates and optimizing your financial strategy.
