In the recent unveiling of Budget 2024, entitled "Fairness for Every Generation," officials outlined a series of new measures to bolster small and medium-sized enterprises (SMEs) across the country.
The announcement was made by Chrystia Freeland, Deputy Prime Minister and Minister of Finance, alongside Rechie Valdez, Minister of Small Business. The budget introduces several initiatives to reduce bureaucratic hurdles and provide essential resources to help businesses expand.
Among the key features of Budget 2024 is the introduction of the Canada Carbon Rebate for Small Businesses. This new refundable tax credit will redistribute over $2.5 billion from carbon pricing revenues collected between 2019-20 and 2023-24 to approximately 600,000 SMEs in provinces where the federal backstop on carbon pricing is applied. Businesses need only to file their taxes to qualify for this rebate, with a filing deadline set for July 15 to benefit from the initial round of payments.
Another significant change is the Lifetime Capital Gains Exemption increase, effective June 25. The exemption limit will rise to $1.25 million, up from $1,016,836, allowing business owners to save on capital gains taxes from selling small business shares and farming and fishing properties. This exemption will continue to be indexed to inflation.
Furthermore, the budget introduces the Canadian Entrepreneurs’ Incentive, which reduces the inclusion rate to 33.3 percent for up to $2 million in eligible capital gains. This measure is specifically tailored to aid entrepreneurs in the early stages of their businesses' growth, particularly in sectors like technology and manufacturing. When fully implemented, this incentive is expected to provide a substantial exemption boost, enabling entrepreneurs to potentially save on capital gains up to $6.25 million.
The government has also invested $200 million over two years into the Venture Capital Catalyst Initiative, which began in 2026-27. This investment aims to enhance venture capital availability for equity-deserving entrepreneurs and foster innovation in communities outside major urban centers.
Additionally, Budget 2024 plans to increase government procurement from innovative SMEs by setting legislative procurement targets.
“Small- and medium-sized businesses are Canada’s economic engine, employing nearly two-thirds of all Canadian workers,” Freeland said. “We are empowering our entrepreneurs to scale-up their ideas, grow their businesses, and create good jobs, by delivering the tools they need to succeed. When entrepreneurs and businesses do well, including young entrepreneurs, all of Canada benefits.”