Digital Retail & Technology | Finance & Taxation | Independent Retailers | National

What financial supports are available in the April 2021 Federal Budget to help small and medium retailers with tech costs?

May 5, 2021

The Canada Digital Adoption Program

The Canada Digital Adoption Program will provide support for retailers adopting new digital technologies to expand their customer base online (e.g. e-commerce).

Eligible retailers will receive microgrants to help offset the costs of going digital as well as support from digital trainers.

There will also be a second program stream for “off-main street” businesses, such as small manufacturing and food processing operations. Support for these businesses will emphasize advisory expertise for technology planning and financing options.  In general, this part of the program is not relevant to retailers.

You can find more information in the 2021 federal budget release. View release.

Enhancing the Canada Small Business Financing Program

The budget proposes to improve the Canada Small Business Financial Program through the following measures:

  • Expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses.
  • Increasing the maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 years for equipment and leasehold improvements.
  • Expanding borrower eligibility to include non-profit and charitable social enterprises.
  • Introducing a new line of credit product to help with liquidity and cover short-term working capital needs.

You can learn more about the Canada Small Business Financing Program on the government’s website. View information.

Immediate expensing of up to $1.5M

Budget 2021 proposes to provide temporary immediate expensing in respect of certain property acquired by a Canadian-Controlled Private Corporation (CCPC).

Retailers wanting to invest in ecommerce and curbside technologies to navigate pandemic recovery could likely turn to this immediate expensing program to cushion such expenses in the short term. This could free funds for other business needs during recovery. 

This immediate expensing would be available for “eligible property” acquired by a CCPC on or after Budget Day and that becomes available for use before January 1, 2024, up to a maximum amount of $1.5 million per taxation year.

A CCPC may expense up to $1.5 million in addition to all other Capital Cost Allowance (CCA) claims under existing provisions of the Income Tax Act, provided the total CCA deduction does not exceed the capital cost of the property.

Eligible investments will cover over 60 per cent of capital investments typically made by Canadian-controlled private corporations. This includes investments in a broad range of assets, including digital assets and intellectual property.  

Immediate expensing under this new rule would not change the total amount that can be deducted over the life of a property – the larger deduction taken in the first year in respect of a property would eventually be offset by a smaller deduction, if any, in respect of the property in future years.

  • The immediate expensing would only be available for the year in which the property becomes available for use. The $1.5 million limit would be shared among associated members of a group of CCPCs. For those CCPCs with less than $1.5 million of eligible capital costs, no carry-forward of excess capacity would be allowed.
  • CCPCs with capital costs of eligible property in a taxation year that exceed $1.5 million would be allowed to decide to which CCA class the immediate expensing would be attributed and any excess capital cost would be subject to the normal CCA rules.

How do I know if my company is a Canadian-controlled private corporation (CCPC)?

The CRA has a list of requirements that you must meet at the end of the tax year in order to be a Canadian-controlled private corporation (CCPC).

The general theme is that the CCPC label is restricted to private companies controlled by Canadian individual and private corporate residents. 

View CRA CCPC Requirements

How do I apply?

Most likely through your CRA My Business Account or simply by taking advantage of this immediate expense at tax time. More application details will be available shortly.   

For more information

Federal April 2021 Budget (p.614 of pdf)

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