By CRM Staff
Toronto, Ontario — March 20, 2019 — Canada’s 2019 Federal Budget was officially tabled to Parliament on Tuesday, and is expected to swiftly pass through both houses. In this week’s series, Collision Repair will be taking a closer look at how Canada’s collision community will be affected by the spending changes from a business perspective.
The first part focuses on providing a breakdown of the headlines most relevant to business owners, highlighting the tax breaks and new spending initiatives which seem likely to have the largest impact on the collision sector.
Small Business Taxes
Repair facilities with more than a half-million dollars in annual revenue will not see any change to their rate of taxation. New tax breaks, originally announced in December, could provide some comfort. The Accelerated Investment Incentive allows businesses of all sizes in all sectors of the economy to write off a larger share of the cost of newly acquired assets in the year the investment is made.
While businesses in the sector will not receive access to significant tax relief, larger facilities can expect to pay increased EI premiums.
The Government proposes employers will pay EI premiums for the first $53,100 of salary, up from $51,700 in 2018. On the flip side, new investments in training could benefit many businesses, and facilities that pay less than $20,000 dollars in EI premiums will see a reduction to their bills. The proposed Premium Reduction Program will provide $1 billion to organizations that put considerably more into EI investments then are claimed by former employees.
Canada Training Benefit
In the budget, Minister of Finance Bill Morneau introduced the Canada Training Benefit, giving individuals—not their employers—the ability to receive up to one month of EI benefits during training periods.
Expected to launch in 2020, after the next election, the program is designed to help improve the supply of qualified labour forces, especially in industries that fact a shortage of qualified workers—like the collision sector.
In a press release, the Government wrote: “Canadians are among the most skilled and highly educated workers in the world. But today, the evolving nature of work means that people may change jobs many times over the course of their working lives, or may require new skills to keep their jobs in a changing economy. For working Canadians, this presents a new challenge: how to get the training they need to keep their existing jobs or prepare for a new one.”
Under the proposed terms of the new plan, any employee has the right to a month of job-protected leave once for every four years of work, so long as it is used to pursue new training. During this leave, claimants would be entitled to EI payments equivalent to 55 percent of their incomes. On top of this, people earning less than $150,000 aged between 25 and 64 will receive a maximum of $250 for money spent on training.
Electric Vehicle Incentives
While the new training scheme may have a more direct impact on repair businesses, its impact on drivers could have a much more profound effect on the way repairs are performed. The government is investing $300 million to incentivize the purchase of mid-price electric vehicles.
“With this budget, we are taking steps to make zero-emission vehicles more affordable for more Canadians…who want to make the switch and pay less at the pump,” said Morneau said as he presented the budget in Parliament.
The new funding, which was announced by finance minister Bill Morneau as a part of the Liberals 2019 budget, will provide customers with a $5,000 incentive when buying a new electric or hydrogen-powered vehicle with a base price under $45,000. Quebec buyers will receive the new rebate on top of the provincial government’s current incentive of up to $8,000 for a vehicle priced at $75,000 or less.
Morneau added that the budget will “provide expensing to a full range of zero-emission vehicles so that businesses that want to switch over their fleet can recoup that investment sooner.”
Under the new plan companies will be eligible to deduct the full value of a ZEV during the year it is purchased, up to $55,000. As of right now, a conventional gasoline vehicle has a maximum business deduction of $30,000.
By limiting the benefits to electric vehicles in a more widely available price range, the Government aims to artificially raise the demand of widely available electric vehicles, and incentivize manufacturers to find new ways to meet this demand.
Transport Canada will be responsible for implementing the rebates which will spread over a three-year period. In order to provide the infrastructure necessary to handle an increase in electric vehicles, Natural Resources Canada will receive $130 million over the next five years to build charging stations across the country, including in public parking lots and in commercial and residential buildings.
Earlier this year the Liberals announced a target of all vehicles sold in Canada being zero-emission by 2040. Under the target, gas-free vehicles would make up 10 percent of the market by 2025, and 30 percent by 2030, before reaching the target of zero-emission by 2040.
In part two of this series, Collision Repair will be taking a closer look at the Canada Training Benefit. The benefit has received criticism from some small business advocacy groups for not providing employers an opportunity to impact what training their employee participates in and that the paid leave could be used to move into other industries. While the prospect of having employees take a month-long leave to study Mycenean architecture may fill repairers with dread, some analysts believe this problem is overstated.
If you would like to share your opinion on the Canada Training Benefit, offer advice on strategies for encouraging employees to make effective use of these leaves, do not hesitate to contact Collision Repair‘s editor Gideon Scanlon at Gideon@mediamatters.ca.
