TORONTO, Oct. 29, 2026 /CNW/ -- The Canadian Federation of Independent Business (CFIB) is calling on the federal government to put small businesses at the centre of its Nov. 5 budget. Topping the list of priorities for entrepreneurs is cutting the small business tax rate, along with fixing the gaps in Canada's tariff relief programs that cut out small firms.
"Several media reports indicate the upcoming budget may focus on small businesses and include measures such as lowering the small business tax rate and reducing EI premiums for smaller payrolls. If true, this would be very good news," said Dan Kelly, CFIB president. "The federal tax rate has been stuck at 9% since 2019. It's time Ottawa improved Canada's tax system, and that starts with cutting taxes for small businesses."
Some critics argue that the Small Business Deduction (SBD) discourages firms from growing past the $500,000 corporate income threshold. CFIB analysis shows otherwise. Only about 0.4% of SBD claimants have income levels at the current threshold. This means over 99% of smaller firms are not holding off on growth because of the deduction.
"Very few businesses sit near the threshold, and many of those that do tend not to stay there year after year and actually often speed up their investments, not hold back," said Simon Gaudreault, CFIB chief economist and vice-president of research. "The real constraints to growth have more to do with the overall tax burden, heavy regulation, financing and economic conditions. That's why cutting the small business tax rate matters."
Tariff pressures squeezing small firms further
More than two months after U.S. Section 338 tariffs kicked in on Aug. 22, many small businesses remain ineligible for federal tariff support programs. The federal Regional Tariff Response Initiative (RTRI) was expanded on Sept. 8, but most regions still require applicants to have at least $1 million in annual revenue, excluding many smaller businesses from even applying.
"Ottawa didn't design these programs with small firms in mind. More than 50,000 small firms are caught in the trade crossfire, and it is deeply unfair that most are deemed too small to qualify for tariff relief available to larger firms," Kelly added. "A full 90% of small business owners believe Ottawa should be using the revenue generated by counter tariffs to provide help to those most affected."
CFIB's top priorities for the 2026 federal budget include:
- Small business tax rate: Reduce the federal small business tax rate from 9% to 6%, increase the small business deduction threshold to at least $700,000, and index the threshold to inflation going forward.
- Thresholds: Raise and index yearly outdated tax thresholds like the GST/HST registration threshold (unchanged since 1991) from $30,000 to at least $60,000 and the CPP basic exemption (unchanged since 1998) from $3,500 to $7,000.
- Tariffs: Return counter-tariff revenues to businesses directly affected by the U.S.-Canada trade war and provide options for tariff relief for businesses under $1 million in revenue.
- Employment Insurance: Lower Employment Insurance (EI) premiums for smaller employers by allowing them to pay the employee amount for total wages under $600,000 (similar to the EI Small Business Job Credit of 2015/2016).
- Capital gains: Introduce a lower capital gains inclusion rate for small firms of 33% on the next $2 million of gains beyond the Lifetime Capital Gains Exemption (LCGE), and exempt taxes from capital gains incurred following the sale of a business (shares and assets) when the proceeds are reinvested in a Canadian-controlled private corporation within the next three years (rollover policy).
"Small businesses tell us they don't want handouts. They want broad policies that would help them reinvest in their businesses and plan for the future. While major project investments usually get the spotlight, we also need to be building the foundation of our economy by making it more attractive to start and grow a small business," said Corinne Pohlmann, CFIB executive vice-president of advocacy. "When government cuts taxes, business owners put that money back into the economy by raising wages, hiring or expanding. This budget is Ottawa's chance to show entrepreneurs it takes their concerns seriously."
CFIB will be available for comment prior to and after the release of the federal budget.
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada's largest association of small and medium-sized businesses with 103,000 members across every industry and region. CFIB is dedicated to increasing business owners' chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.
SOURCE Canadian Federation of Independent Business (Toronto)
For media enquiries or interviews, please contact: Dariya Baiguzhiyeva, CFIB, 647-464-2814, [email protected]
Share this article