On November 21, 2018, the Department of Finance Canada released its 2018 Fall Economic Statement. Described as the “next step in the Government’s plan to grow the economy by investment in middle class jobs,” the Fall Economic Statement outlines a number of initiatives that the federal government intends to launch.
Specifically, the proposals include:
- Allowing the full cost of machinery and equipment used in the manufacturing and processing of goods to be written off immediately for tax purposes, as well as introducing the Accelerated Investment Incentive. These measures aim to encourage the investment in assets that will help drive growth.
- Making specified clean energy equipment eligible for an immediate write-off at full cost.
- Furthering business innovation by committing an additional $800 million over five years to the Strategic Innovation Fund.
- Launching an Export Diversification Strategy whereby Canada’s overseas exports will increase by 50% by 2025.
- Improving interprovincial trade within Canada by removing barriers related to the transportation of goods, food inspection, regulation of the construction sector and trade in alcohol.
- Establishing a Social Finance Fund to provide charitable, non-profit and social purpose organizations with access to new financing.
- Furthering pay equity in federally regulated sectors.
The government also took the opportunity to announce three measures aimed at supporting Canadian journalism.
Finally, the 2018 Fall Economic Statement offers a snapshot of the state of the Canadian economy, including the following statistics:
- Canada’s economic growth in 2017 weighed in at 3% — the strongest of all the G7 countries.
- The country’s unemployment rate is at a 40-year low, with 550,000 new full-time jobs created over the last three years.
- Wage growth is outpacing inflation and is on track to make 2018 the strongest year of wage growth in close to a decade.
- The after-tax profitability of Canadian businesses is up, as compared to historical averages.
- The government is predicting a decline in the federal deficit from $19.6 billion in 2019-20 to $11.4 billion by 2023-2024. The federal debt-to-gross domestic product ratio is projected to continue declining and to reach 28.5% by 2023-24.
If you have any questions related to the 2018 Fall Economic Statement and the impact the proposed measures could have on your business, please don’t hesitate to contact us