2010 Federal Budget Highlights for Private Companies

There is a lot of information available on yesterday's Federal budget, but what does it really mean for Canadian private business owners? No major changes were proposed that would have any broad impact, but there were some specific items to take note of; dealing with employee stock option plans, private foundations and the purchase of manufacturing equipment.

Stock Options

The budget effectively eliminated the use of "tandem" plans.  Basically, a tandem plan allowed, through the use of stock options, an employee to receive cash compensation at half normal tax rates while still allowing the corporation to receive a full deduction from their income. Although typically stock option plans are associated with public companies, there are many private Canadian companies with equity compensation plans, especially in the engineering and high technology fields.

Charitable Foundations

Numerous high net worth families have established private charitable foundations. Disbursement quota reform will simplify the calculation of your charity’s minimum spending requirements and in many cases, will relax the timelines associated with a charity’s requirement to spend on its charitable programs and/or on its gifts to other registered charities.

Manufacturing Equipment

Over 1,500 tariff items pertaining to imported machinery and equipment, and/or on goods imported for further manufacturing are eliminated or reduced effective today as a result of yesterdays budget.

Visit the PwC Canada Federal Budget information page for more details.