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From a focus on creating jobs and supporting growth, to an effort to keep taxes low and long-term prosperity high, the Harper government's Economic Action Plan 2015 will affect small businesses in a number of ways. What's the take-home message for business owners? You need to understand how the corporate and personal tax changes will affect your bottom line. Here are five key questions small business owners should ask themselves:

1. How will changing corporate tax rates affect me? On the corporate side, a number of changes will affect private business owners. The most prominent among them is the proposed reduction to the corporate tax rate. The current combined corporate tax rate for businesses in Ontario, for the first $500,000 of income, is 15.5 per cent. Under the Budget proposals, we'll see that rate drop to 13.5 per cent over the next four years. Once the deduction is fully implemented, small business owners could benefit from a savings of $10,000 per year. Even so, this will be offset by higher personal tax on dividends paid out of small business earnings – so make sure you understand the big picture.

2. What's changing on the manufacturing front? The newly tabled Budget focuses heavily on the manufacturing sector and has made the temporary capital cost allowance – announced in the 2013 budget – permanent. The initiative, designed to support the manufacturing sector, will allow companies to write-off the cost of machinery more quickly, and lower their taxes. The unexpected side effect of this new legislation is the actual write-off will be slower than anticipated. That means you'll be able to write off 90 per cent the cost of equipment in the first 4 years as opposed to 100 per cent in 3 years under the old temporary measure.

Continuing its support of the manufacturing sector, the government also introduced $100-million to create an Automotive Supplier Innovation Program over the next five years. This program will strengthen Canada's parts supply base and create a favourable environment for automotive research and development, while providing firms with new opportunities to enter global supply chains.

3. How does the Budget fuel our growth? The Canada Small Business Financing Act is evolving. We'll see the maximum loan amount for real property increase from $500,000 to $1-million. In addition, the small-business eligibility criteria is changing, too. The scope will shift from firms with gross annual revenues of $5-million or less to include firms with gross annual revenues of $10-million or less.

The government is also concentrating on young entrepreneurs. This Budget pegs $14-million over two years for Futurpreneur Canada, starting in 2015–16. This funding is conditional on Futurpreneur Canada raising matching funds from non-federal sources.

From a personal tax perspective, a handful of small changes will also have significant implications for business owners – so be sure to explore all them.

4. What's happening with the TFSA? As promised during the last election, the Conservatives have increased the annual Tax-Free Savings Accounts (TFSA) limit from $5,500 to $10,000. This increase allows Canadians to invest and avoid paying tax on the income and capital gains made on those investments. If you're already maxing your TFSA contributions and putting cash in other non-tax sheltered accounts, this increase can help you save on future taxes.

5. Will changes to RRIFs affect me? The government is lowering the annual amount that seniors must withdraw from their Registered Retirement Income Funds (RRIFs). This move addresses concerns that existing rules place seniors at risk of outliving their savings. Currently, a senior must withdraw 7.38 per cent of the RRIF in the year they are 71 at the start of the year, with the withdrawal rate increasing each year until age 94, when it's capped at 20 per cent.

The new rules will lower the amount seniors are required to withdraw at age 71 to 5.28 per cent of their RRIF, and at age 80 reduce it to 6.82 per cent, before the rate increases to 18.79 per cent at age 94. So small and family business owners should take note, and plan accordingly.

While some of the tax measures introduced in the Economic Action Plan 2015 will take affect right away, others will not be fully realized until years down the road. Long-term affects remain to be seen, however, small business owners can look to the new budget for measures to help support growth and profitability.

David Steinberg is the national co-leader of the Private Mid-Market practice at EY. Follow EY's Private Mid-Market practice on Twitter @EY_CAPrivateCo and follow David Steinberg @SteinbergPMM. To learn more about how EY supports private companies, visit ey.com/ca/pmm.

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