The Honourable Jim Flaherty, Minister of Finance, today highlighted the fact that in 2010 Canada will have the lowest overall tax rate on new business investment in the Group of Seven (G7) industrialized countries.
"As a result of federal and provincial business tax changes and bold tax reductions, Canada has created an internationally competitive tax climate for new business investment," said Minister Flaherty. "Early actions taken by our government, as well as the measures included in Canada’s Economic Action Plan, are positioning Canadian businesses to emerge stronger and better equipped to compete globally as the economy recovers."
In addition to the lowest overall tax rate on new business investment in the G7, Canada is on track to having the lowest statutory corporate income tax rate in the G7 by 2012. By 2012, Canada will also have an overall tax rate on new business investment that is lower than the average of the Organisation for Economic Co-operation and Development.
Key tax measures to support competitiveness include:
- Substantial, broad-based tax reductions that are lowering the federal general corporate income tax rate from 22.12 per cent (including the corporate surtax) in 2007 to 15 per cent in 2012. These tax reductions include the elimination of the corporate surtax in 2008 for all corporations and a reduction in the federal general corporate income tax rate to 18 per cent as of January 1, 2010.
- A reduction of the federal income tax rate applying to qualifying small business income to 11 per cent in 2008, and an increase in the amount of income eligible for this rate to $500,000 in 2009.
- Alignment of capital cost allowance rates for a number of assets to better reflect their useful life—this both reduces the tax burden on investment and ensures neutral tax treatment of different capital assets, encouraging investment to flow to its most productive uses.
- Elimination in 2006 of the federal capital tax, and the introduction in 2007 of a temporary financial incentive to encourage provinces to eliminate their general capital taxes and to eliminate or replace their capital taxes on financial institutions with a minimum tax. All provincial general capital taxes will be eliminated by 2012.
"The competitiveness of our business tax system encourages new investment in Canada, including direct investment from abroad," said Minister Flaherty. "A competitive business tax system is essential for encouraging new investment, growth and job creation."
Since 2006, the Government of Canada has introduced significant tax relief for Canadian businesses, including measures in Canada’s Economic Action Plan, that total more than $60 billion over 2008–09 and the following five fiscal years.
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For further information, media may contact:
Annette Robertson
Press Secretary
Office of the Minister of Finance
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Jack Aubry
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