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In the midst of uncertainty surrounding our neighbours to the south, particularly regarding U.S. tax reform, the Liberal government delivered a modest federal budget that is focused on skills training, innovation and how Canada will promote sustainable growth.

With high expectations of growing the Canadian economy, the government outlined a forecasted deficit of $28.5-billion, up from $27.8-billion, and laid out a long-term vision that expands on measures implemented in the Liberal's first budget.

Here are the top items small business owners need to know about how the 2017 federal budget may impact them:

No changes to income tax rates or the capital gains inclusion rate. After a significant increase in the top personal marginal tax rate in 2016, the federal corporate and personal tax rates remain unchanged. It was heavily rumoured that Budget 2017 may include changes to the capital gains inclusion rate. Currently, 50 per cent of capital gains realized are taxable. While it was speculated that Budget 2017 would increase this percentage to 66 per cent, or even to the 75 per cent inclusion rate that applied during the 1990s, there are also no changes to the inclusion rate. The Standing Committee on Finance had also recommended, in December 2016, a detailed review of the tax treatment of the intergenerational transfers of businesses, but Budget 2017 was also silent on any measures addressing such transfers.

The government continued with its plan of closing down perceived tax loopholes and inequalities in the tax system. Some of the measures include:

Changes that will affect certain professionals. The government eliminated a tax deferral opportunity for certain professionals. Accountants, dentists, lawyers, medical doctors, veterinarians and chiropractors will no longer be able to elect to exclude the value of work in progress in computing their income. This measure will be phased-in over two taxation years, starting with taxation years that begin after this budget. The work in process of these professionals will have to be valued at the lesser of cost and fair market value.

Recognition of gains and losses on derivatives. Budget 2017 introduces measures that will allow corporations to elect to use a mark-to-market method for derivatives held on account of income (not on derivatives held on account of capital). For those who make the election, gains and losses on derivatives will be recognized each taxation year, thus matching the recognition of gains and losses for book and tax purposes. Caution should be exercised, however, as once made, ministerial approval will be required to revoke the election. An additional measure was proposed to eliminate the use of what is referred to as "straddle transactions." Such transactions were typically used to defer income, whereby, when two offsetting derivatives were entered into, the loss derivative was triggered in one year and the gain derivative in the year following. While there are a number of exceptions, this new anti-avoidance provision will prevent a mismatch in the timing of the recognition of the gains and losses on such instruments.

Tax planning using private companies. Budget 2017 does not include any specific measures that will impact the taxation of private companies and their shareholders, however the finance minister made it very clear that the Liberal government remains committed to improving tax fairness by shutting down tax planning arrangements that solely benefit "wealthy" Canadians – in other words, tax planning arrangements using private corporations to avoid paying a "fair share" of tax remains very high on the Department of Finance's agenda. Finance will be releasing a paper in the coming months setting out the nature of these issues in more detail. Examples of the offensive planning cited in the budget documents include things like income splitting among family members through private companies and converting investment income to capital gains. It's expected that the tax burden of families using such strategies will be on the rise.

Cracking down on tax evasion and combatting tax avoidance. Budget 2017 promises an additional $523.9-million over five years to prevent tax evasion and improve tax compliance. As a result, the CRA is expected to hire more auditors, increase the number of tax audits and improve its internal risk assessments. This will undoubtedly increase the number of tax audits that businesses and their shareholders undergo and overall tax compliance costs.

Innovation and Skills Plan. Budget 2017 introduces the Innovation and Skills Plan with the ambitious objective of building the world's most skilled, talented, creative and diverse workforce. Federal support for training and upgrading skills will be boosted by $2.7-billion through provincial transfers over six years to assist businesses to stay competitive. The budget also addressed the theme of innovation with a plan focused on adhering to government's agenda to redesign and redefine how it supports innovation and growth. Budget 2017 also proposes to establish Innovation Canada, a new platform expected to consolidate and simplify a plethora of innovation programmes within the government. Focused on "key growth industries," including clean technology, advanced manufacturing, digital technology, health/bio sciences, clean resources and agri-food, Budget 2017 will provide, on a competitive basis, up to $950-million over five years to these industries with the expectation that this will lead to the creation of "superclusters" of innovative businesses. Canadian innovators will also see some new venture capital as the Business Development Bank of Canada will receive an additional $400-million and Canada has proposed more than $2.2-billion to support clean technology to help accelerate growth for companies in that industry – of which $1.4-billion will be provided through the BDC. So if you are a small business looking for financing through the BDC, there should be more opportunities for you on the horizon because of Budget 2017.

While many small business owners will have to wait for Finance's paper on tax planning and private corporations to determine what, if any, additional tax costs may be forthcoming, for most small business owners – other than those in the "key growth industries" – Budget 2017 will likely have minimal impact, and they will carry on business as usual.

Sandy Maag is a tax leader with EY's Private Client Services. Follow EY's Private Client Services practice on Twitter @EY_CAPrivateCo.