FREDERICTON, N.B. – The provincial government introduced legislation today to lower the small business corporate income tax rate to 2.5 per cent effective April 1, 2018. Legislation was also introduced to help self-employed New Brunswickers and employees of small and medium-sized businesses save for retirement through Pooled Registered Pension Plans (PRPP).
“New Brunswick’s small businesses are crucial to our economic growth and creating jobs in our province,” said Finance Minister Cathy Rogers. “Your government is proud to continue taking steps to benefit small businesses by reducing the small business income tax rate to help businesses compete, invest and create jobs.”
This is the fourth consecutive cut to the tax rate since Jan. 1, 2015, when it was 4.5 per cent.
The new Pooled Registered Pension Plans Act aims to reduce the administrative burden of operating a pension plan and make offering a pension plan more attractive and affordable for small and medium-sized businesses.
“We understand the financial challenges that many New Brunswickers face in retirement,” said Rogers. “This act will allow for an additional instrument to New Brunswickers for pension planning that is low-cost to both employees and employers.”
The act has provisions to allow a worker to join a PRPP and make contributions to a pension fund if they are self-employed or if their employer does not provide a pension plan. An employer may also contribute but it is voluntary. Because the employee contributions would be pooled, the plan would offer investment and savings opportunities with lower administration costs.
This new option could also benefit small and medium-sized businesses trying to attract potential employees and retain existing ones.
The Financial and Consumer Services Commission contributed to the proposed legislation.
“Many self-employed New Brunswickers and employees of small and medium-sized businesses do not have access to a workplace pension,” said Rick Hancox, the commission’s chief executive officer. “As a result, many of these New Brunswickers may see their standard of living drop significantly during their retirement years. PRPPs will make retirement saving accessible for every working New Brunswicker.”
In addition, housekeeping amendments are being proposed to ensure the New Brunswick Income Tax Act is consistent with the federal Income Tax Act, as a result of changes to the federal act over the years. Furthermore, as a result of the recent banning of corporate and union donations to political parties, an amendment is being proposed to eliminate the political contribution deduction (tax credit) for corporations, effective June 1, 2017.
To provide further support to business, the government has taken steps to improve access to capital, which is an important component to the health and sustainability of the business community. The Small Business Investor Tax Credit has been increased for individual investors from 30 per cent to 50 per cent and eligibility has been expanded to include Community Economic Development Funds.