Canada’s economic health can no longer rely on resource exports or large-scale energy project development, argues the Investment Industry Association of Canada (IIAC) in a pre-budget submission to the House of Commons Standing Committee on Finance.
Instead, higher investment in small- and mid-sized businesses has the potential to spur entrepreneurship and business expansion, kick-starting the economy. IIAC recommends that the federal government:
- implement legislation to provide for the deferral of income tax on taxable capital gains incurred in a taxation year when the proceeds are reinvested in small business shares within a six-month period;
- implement a tax relief scheme to spur investment in small Canadian companies and start-ups modeled after the successful UK Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS); and
- create targeted efforts to improve existing federal tax-assisted savings vehicles, including:
- relief of employers’ and employees’ contributions to group RRSPs from payroll tax;
- an increase to annual RRSP contribution limits and compensatory adjustments for individuals that have missed annual contributions due to temporary interruption of their working careers; and
- elimination of mandatory minimum yearly drawdowns from RRIFs and similar accounts.