Entrepreneurs in Manitoba are celebrating the holiday season a little earlier this year.
On Dec. 1, the province will become the first in Canada to have a 0 per cent small-business tax rate, according to the Canadian Federation of Independent Business (CFIB).
Along with the federal corporate income tax rate of 11 per cent, all Canadian small-business owners pay a reduced provincial tax rate up to a threshold, which varies between $400,000 and $500,000. Above that threshold, a higher provincial corporate tax rate applies.
In 1999, Manitoba had a tax rate of 8 per cent - the second highest in the country. Today it's the lowest.
"It's a significant saving for small business owners," said Rosann Wowchuk, Manitoba's Finance Minister and the province's Deputy Premier. "We pleased to be taking a lead in the country."
"This move is about supporting entrepreneurship. It allows small businesses to keep more of their profits and reinvest in their companies, their employees and their communities," said Catherine Swift, president of the CFIB.
While provinces like Ontario, Alberta and Saskatchewan hover around a 3 per cent to 4 per cent small-business tax rate, Manitoba set a new standard by slashing its rate to nothing.
The race to zero has been years in the making, said CFIB's new Manitoba director Janine Carmichael, and it's the result of careful planning on the part of her organization as well as the government.
"We commend the Manitoba government on this move. While we want to help bring even more positive change for entrepreneurs in this province, this is certainly something to celebrate," added Ms. Carmichael.
British Columbia is planning to eliminate its small business tax rate in April of 2012.