The Canadian government recently announced a series of significant measures designed to support small and medium-sized businesses (SMBs) across the country. These initiatives, which include rebates, reduced transaction fees, and updates to payment industry regulations, aim to make it easier and more affordable for entrepreneurs to run their businesses.
This article will break down the latest initiatives. If you’re a small business owner, here’s what you need to know about these new changes and how they can benefit your business.
Canada Carbon Rebate for Small Businesses
One of the biggest announcements from the government is the new Canada Carbon Rebate for Small Businesses. This program will return over $2.5 billion to Canadian businesses by the end of 2024. But what does this really mean for you?
If you own a small business and have fewer than 500 employees, you’re likely eligible for this rebate. The government is giving back a portion of the fuel charges from previous years (2019 to 2024) to help offset some of the rising costs. You don’t need to apply for this rebate. If you’ve already filed your 2023 tax return by the July 15 deadline, your payment will automatically be processed.
Here’s what you can expect:
- If you’re registered for direct deposit with the Canada Revenue Agency (CRA), you’ll receive your rebate by December 16, 2024.
- If you’re receiving a cheque, the payment will arrive by December 31, 2024.
For businesses that missed the initial tax return deadline, the government is proposing an extension to December 31, 2024. This means if you file your tax return by this new deadline, you’ll still be eligible for the rebate, although the payment might arrive later.
To give you an idea of the impact:
- A small business with 10 employees in Ontario could receive up to $4,010.
- Larger businesses, like one with 50 employees in Alberta, might receive up to $29,550.
- Businesses with 499 employees in Saskatchewan could see rebates as high as $576,844.
Lower Credit Card Fees for Small Businesses
Credit card processing fees can be a major cost for small businesses. The good news is that starting October 19, 2024, these fees are going down. The Department of Finance Canada, led by Deputy Prime Minister and Minister of Finance Chrystia Freeland, has negotiated new agreements with Visa and Mastercard that will help businesses save money every year.
Here’s how the fee reductions will work:
- For in-store purchases, credit card interchange fees will drop to an annual average of 0.95%.
- For online transactions, these fees will be reduced by up to 7%.
What does this mean for your business? If you currently process $300,000 in credit card payments each year, you’re likely paying nearly $4,000 in fees. With these new reductions, you could save around $1,080 annually. Over the next five years, the government expects these fee reductions to save small businesses across Canada nearly $1 billion.
Visa and Mastercard have also agreed to provide small businesses with free resources to help prevent fraud and chargebacks. This is especially helpful if you’re running an e-commerce business, as it can protect you from some of the risks involved in online transactions.
Updated Code of Conduct for the Payment Card Industry
Another key change announced by the government is an update to the Code of Conduct for the Payment Card Industry in Canada. If you accept credit or debit card payments at your business, this is something you’ll want to know about. The new Code will come into effect on October 30, 2024, and it’s designed to make payment processing more transparent and fair for small businesses.
Here are some of the main updates:
- Easier Comparisons: The updated Code will require payment processors to clearly disclose their fees. This will make it simpler for you to compare different offers and choose the one that’s best for your business.
- Faster Complaint Handling: If you have an issue with your payment processor, the complaint process will be quicker. The response time for complaints will be reduced by nearly 80%, with businesses receiving a resolution within 20 business days.
- More Flexibility: If your payment processor doesn’t pass along fee reductions, you’ll have the right to exit the contract without penalty. This gives you more control over your payment processing arrangements.
More than 1 million businesses in Canada currently accept credit card payments, and these updates aim to give them greater transparency and protection. The Code is binding on all major payment card networks, which means your processor must comply with these rules.
Eligibility Criteria for Canada Carbon Rebate
To qualify for the Canada Carbon Rebate for Small Businesses, there are a few simple criteria:
- Your business must be a Canadian-controlled private corporation.
- Your business must have had 499 or fewer employees in Canada during the calendar year when the applicable fuel charge year began.
- The rebate will be available in provinces where the federal fuel charge applies, which includes Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan.
If your business meets these criteria and has filed a 2023 tax return, you should automatically receive the rebate. However, if you’ve missed the tax return deadline, make sure to file by December 31, 2024, to still be eligible.
How Can These Changes Help Your Business?
Managing a small business involves many challenges, and recent changes aim to ease some financial pressures. These include lower credit card fees, fuel charge rebates, and updated payment processing rules to create a more manageable business environment.
Here are some simple steps you can take to make the most of these changes:
- Check Your CRA Direct Deposit Status: If you haven’t set up direct deposit with the Canada Revenue Agency, now is a good time to do so. It’s the fastest way to receive your carbon rebate payment.
- Review Your Credit Card Processing Fees: Take a close look at your current credit card processing fees. With the new reductions coming into effect, make sure your payment processor is passing these savings on to you.
- Stay Informed About Your Rights: Under the updated Code of Conduct, you have the right to exit your payment processing contract without penalty if fee reductions aren’t being passed along. Make sure you’re aware of this right, and don’t hesitate to explore other options if necessary.
By understanding these changes and taking a few proactive steps, you can ensure that your business benefits from the new support measures.
Conclusion
The recent government announcements represent a significant step forward in supporting small businesses across Canada. From the Canada Carbon Rebate to reduced credit card fees, these initiatives are designed to make it easier for you to focus on growing your business without worrying as much about rising costs.
These measures build on previous efforts, like the small business tax cut introduced in Budget 2022, which has already saved businesses millions in taxes. Whether you’re just starting out or have been running your business for years, these new supports are worth paying attention to.
Take the time to understand what’s available and how it applies to your business. With these changes in place, you’ll have more resources to invest in what matters most—growing your business and serving your community.
