Event: Western Innovation Forum
Venue: Fairmont Hotel, Vancouver, BC
Date: April 17, 2015
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Thank you for that kind introduction. It's a pleasure to be here.
For more than 25 years, Western Economic Diversification Canada has been the catalyst for innovation in western Canada.
By developing partnerships and making strategic investments that help transform knowledge into new products, processes, and services, Western Diversification (WD) delivers opportunity and benefits for western businesses and research institutions.
WD's priorities are consistent with our Government's long-term economic plan to improve business competitiveness across Canada.
Economic Action Plan 2015 will be tabled by our Finance Minister Joe Oliver on Tuesday. EAP 2015 continues to focus on the drivers of job creation and growth—innovation, investment, skills and communities.
To compete in today's economy, Canada must be home to globally competitive businesses that innovate and create high-quality jobs.
The good news is that our fiscal situation is sound and economic growth has been solid.
We have the lowest unemployment rate in six and a half years, and we have created 1.2 million net new jobs since the depths of the recession. Jobs like those created at Weatherhaven, Intelligence MDA, Seaspan Shipyards, OSI Maritime Systems, and more.
We need more companies like these homegrown Canadian innovators.
Job creators are the backbone of Canadian job growth. We are aware of the important role that these enterprises play in the economy. I have a few statistics for you that prove the economic power of small and medium sized businesses in Canada:
- As of 2012, small and medium sized businesses employed about 10 million Canadians, or close to 90% of the total private labour force.
- In 2011, small and medium sized business were responsible for $150 billion (or 41%) of Canada's total value of exports.
- In 2009, small and medium sized businesses accounted for 49% of total research and development expenditures, spending $7.6 billion.
That's why, believe it or not, CRA is embracing innovation that supports businesses throughout their life cycle.
How? Two areas that I think will be of interest to this audience are:
- first with tax credit support, through the Scientific Research and Experimental Development Program, and the new Small Business Tax Credit,
- and second through reducing red tape and forming a collaborative approach to compliance with businesses.
I am sure many of you are familiar with the Scientific Research and Experimental Development (or SR&ED) Program. It encourages Canadian businesses of all sizes, and in all sectors, to conduct R&D in Canada.
Did you know that in 2014 alone, the Canada Revenue Agency processed over 20,000 SR&ED claims, and provided more than $3.1 billion in tax assistance to innovative Canadian firms?
This program gives businesses the opportunity to create more jobs, engage in home-grown innovation, and expand Canada's knowledge economy.
That being said, we realize the program is not perfect. In October 2010, our Government appointed the Jenkins Panel to advise on enhancing federal programming in support of a more innovative economy.
Chief among the panel's recommendations was a call to support small and medium sized businesses in their efforts to access the CRA's SR&ED program.
The application process was deterring some businesses from applying, or having others seek costly third party advice on how to apply.
We listened to the Jenkins Panel, and took action on their recommendations. The CRA has since developed several tools and services to assist potential SR&ED applicants. In January 2014, we launched an online self‐assessment and learning tool. This helps businesses determine if their R&D work meets program requirements. It includes focused questions, clear explanations, and tips on how to structure an SR&ED claim. At the same time, we began piloting webinars on the SR&ED program. Due to the success of the pilot, these webinars are now provided on an ongoing basis. Next, we introduced the First‐Time Claimant Advisory Service to provide in‐person help. Local CRA employees meet face to face with first-time claimants to provide tailored information for a successful claim. Also, we are currently reviewing the results of another recent pilot project, which provided claimants with a formal pre approval of their SR&ED claims. Finally, we are improving the navigation and accessibility of the SR&ED website.
Initiatives like these will help SR&ED applicants successfully access the program and benefit from the incentives it offers - without having to invest excessive time and money in the process.
Last fall, Prime Minister Harper introduced the new Small Business Job Credit, which took effect in January. This credit effectively lowers small businesses' Employment Insurance premiums from $1.88 to $1.60 per $100 of insurable earnings in 2015 and 2016.
Any firm that pays employer EI premiums equal to or less than $15,000 in those years is eligible for the Small Business Job Credit. Almost 90% of all EI premium-paying businesses in Canada will receive the credit, reducing their EI payroll taxes by nearly 15%.
The Small Business Job Credit is expected to save small businesses more than $550 million over the next two years.
And here's the best part: you don't have to do anything.
CRA automatically determines eligibility and applies the benefit with no administrative burden on the businesses.
Prime Minister Harper has also announced our Government's intent to make changes to the Canada Small Business Financing Program.
This will allow more businesses to apply, and will make larger loans available for small businesses to purchase or improve their land or buildings.
These measures will enhance the ability of small businesses across Canada to grow their businesses by increasing the revenue threshold under which a small business can apply for the program.
And they will support business start-up and growth by increasing the maximum loan amount and the maximum term length for loans financing the purchase or improvement of land and buildings.
I recognize that many companies with us today no longer qualify as small businesses, but you once did. We want to help others focus on growing their businesses to achieve the successes that you have, and feed our economy in the same way you do.
As I highlighted, the second piece of supporting innovation through CRA is our Government's focus on reducing red tape and forming a collaborative approach to compliance with businesses.
Prime Minister Harper calls red tape the "silent killer of jobs". Our Government believes businesses better serve our economy when they are serving their customers, not when they are filing administrative paperwork.
Normally at this point I run through the Top 10 list of ways our Government is cutting red tape through the administrative functions of CRA.
I'll highlight just a few for you today.
First, and the one that represents the biggest culture and attitudinal shift in CRA operations, is our new Liaison Officer Initiative. Liaison Officers proactively reach out to help businesses understand their tax obligations so they can "get it right from the start".
Well over a million corporate tax returns filed by small and medium-sized businesses in Canada each year contain minor errors.
With the Liaison Officer Initiative, we are helping to prevent those errors by providing business owners with personal assistance to make sure the information that they need at key points in their business cycle is available to them.
A specific measure that we took last year has been recognized by the Canadian Federation of Independent Business. I was honoured to receive their annual Golden Scissors Award in January for revising the remittance thresholds for employer source deductions.
This small administrative change eliminated over 800,000 remittances for over 50,000 small and medium-sized businesses.
And, we've got an app for that. The mobile CRA Business Tax Reminders app allows you to create custom reminders and alerts for dates related to instalment payments, returns, and remittances.
I encourage each of you to get and use My Business Account. Through this online self-serve tool, businesses can receive certain correspondence and submit documents to the CRA online.
Businesses now have more freedom to manage their affairs online: such as updating direct deposit banking information through My Business Account.
My Business Account Enquiries Service now allows businesses to ask tax questions related to their account online, and receive information they can rely on, in writing, which is crucial to business planning.
All told, businesses can now complete 50 different kinds of simplified transactions online with the CRA.
And finally I will just mention our AgentID service. Business enquiries telephone service agents are now required to provide an AgentID, which increases accountability. It also ensures a consistent and user-friendly experience for callers and makes it easier for business owners to give feedback on CRA services.
These are CRA-specific examples of our Government's ongoing commitment to reducing the resources spent by business to demonstrate compliance with federal government regulations.
I have directed the CRA to consult with businesses every two years to ensure government action plans continue to align with the priorities of important stakeholders like yourselves.
These ongoing nationwide discussions provide a positive opportunity for businesses to share their thoughts and ideas about the challenges they face in their quest to become significant players in their respective industries.
A strong, healthy, competitive business sector is vital to Canada's success.
Recognizing this, our Government has delivered tax reductions totalling more than $60 billion to job-creating businesses from 2008-09 through 2013-14.
In 2012, we reduced the federal general corporate income tax rate to 15 per cent - down from over 22 per cent in 2007.
In addition to these tax relief measures, we continue to make unprecedented investments in infrastructure projects that will contribute to economic growth, job creation, and productivity in Canadian communities for years to come.
Our New Building Canada Plan will see federal investments of over $53 billion in infrastructure across the country over the next 10 years.
Canada is an increasingly attractive place to work, invest, and do business. According to both Forbes and Bloomberg, Canada is the best country in the G-20 to do business.
Furthermore, Canada's overall marginal effective tax rate is by far the lowest in the G-7 - about 17 percentage points lower than that of the United States.
And Canada offers the lowest business costs in the G-7 for R&D-intensive sectors, with a 15.8 percent cost advantage over the United States.
We are proud of that ranking and of the work we are doing to maintain it. By continuing to modernize our service offerings and invest in Canadian businesses and communities, our Government is supporting your efforts to develop and market innovative products and services.
Together, we are building a strong, competitive and innovative west - and contributing to the long-term economic success of the whole country.
But prosperity is about more than work. It is about keeping more of your hard-earned money.
So we will continue to put more money back into the pockets of Canadians to make life more affordable.
Tuesday's budget will maintain our Conservative government's overarching goal of creating jobs, growth, and long-term prosperity under the Prime Minister's serious, stable leadership, leadership that we need in a challenging and risky world.
Thank you very much for the opportunity to speak with you today.
