Prime Minister Mark Carney’s minority government managed to get its first federal budget passed in the House of Commons on November 17, preventing a winter election and setting a new course for Canada as we head toward the end of the year.
The 2025 federal budget focuses on fostering business growth, encouraging innovation, and simplifying small business owners’ access to government initiatives. Despite these efforts, the budget does not include direct cash relief or tax cuts for all small businesses.
Here are the key takeaways small business owners across Canada should be aware of:
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Boosting Productivity and Innovation
The budget endeavours to supercharge previously announced tax incentives to stimulate new capital investments.
Called a “Productivity Super-Deduction”, it allows businesses to write off their investments by reinstating a first-year tax deduction for most capital investments, and a 100% first-year write off for manufacturing and processing equipment or machinery. This measure is intended to lower Canada’s marginal tax rate by more than 2%.
New Small and Medium-Sized Business Procurement Plan
To strengthen local supply chains and industry growth, the budget allocates $79.9 million over five years for a new Small and Medium Business Procurement Program. This initiative aims to help small businesses secure federal contracts.
SR&ED Tax Credit Is Expanded
To bolster the innovation sector, the Scientific Research & Experimental Development (SR&ED) tax credit has been expanded. The limit for the enhanced refundable credit has been doubled, increasing from $3 million to $6 million.
Carbon Rebate Changes
The Canada Carbon Rebate for Small Business will distribute $623 million in previously announced rebates before the end of 2025. Furthermore, the rebate program will extend deadlines and remove income taxes.
New Small Business Grants
The federal government has introduced new and expanded grants to support companies navigating sector-specific difficulties stemming from U.S. tariffs. These initiatives include the $1 billion Regional Tariff Response Initiative and a $500 million “Pivot to Grow” program administered through Business Development Canada.
You can read more about the 2025 federal budget here.
Be 2026 Ready: Get Comprehensive Small Business Insurance Online Now
Ensuring your small business is ready to rock in 2026 means locking in comprehensive, low-cost business insurance, so you can concentrate on growing your empire worry-free.
Zensurance is Canada’s leading online small business insurance brokerage. We help business owners and entrepreneurs like you get the affordable protection you need to thrive quickly and entirely online.
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Our team of insurance brokers are experts who can find the right policy to suit your needs and budget from one of over 50 insurers in our partner network, customize the policy per your specifications, and issue your policy documents and a certificate of insurance in 48 hours or less.
Don’t take risks with your livelihood and small business. Protect them. Let us help you explore your options and ensure you’ve got the reliable coverage you need to take on the new year with confidence.
– Reviewed by Brandon Bowie, Senior Broker and Team Lead, Professional Lines, Zensurance.
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