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Canada to retain incentives for angel investors

While the business community pushed for changes to the government’s tax proposals, the Canadian Federation of Independent Business (CFIB) said urgent and thorough analysis needs to be done to ensure a win-win situation for both small and big firms.

In a recent consultation with stakeholders at Waterloo, Ontario, Finance Minister Bill Morneau announced that the government will ensure incentives are maintained to still encourage venture capital (VC) and angel investors to inject capital into innovative start-ups.

In a statement, the Department of Finance said the government will work with VCs and angel investors to identify goals and how best to achieve them. Morneau said this shows the government’s mission to encourage young firms to grow.

“We will ensure that people who wish to invest in innovative start-ups are encouraged to do so, and we will work with the venture capital and angel investment sectors to ensure the appropriate incentives are in place,” he said.

He stressed that financing helps young firms create well-paying jobs in Canada, further strengthening the middle class.

CFIB president Dan Kelly welcomed this change, noting that this is another positive step in the current tax proposal consultation.

“We are pleased that the government has listened to some of the concerns of small business owners and reconsidered several of their proposals,” he said.

To recall, the government also made some changes in corporate tax rates, income sprinkling, and passive investments.

Kelly said these changes have to be put under the microscope as the devil always lurks in the details.

“More analysis is needed to determine whether the net effect of the package of changes will be positive or negative for entrepreneurs. CFIB calls on the government to undertake a detailed impact assessment before finalizing the proposals,” he said.

Amongst its suggestions, CFIB will be proposing a full exemption for income sharing with spouses and a significant increase in the amount of the threshold for passive income. “We look forward to working with government to find solutions that don’t negatively affect the small business community’s ability to grow and prosper,” Kelly stressed.