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Tax credit for microbreweries?

New Democrat introduces private bill

  • Thu Mar 19th, 2015 3:00pm
  • News

The federal New Democrats’ small business critic has introduced a bill in the House of Commons aimed at providing a tax credit that will help microbreweries lower the tax burden and as a result expand their business and export offering.

This bill would amends the Income Tax Act to provide for a tax credit for Canadian brewers who brewed less than 15,001 hectolitres (HL) of beer and malt liquor in a fiscal year.

The legislation would provide an automatic tax credit for brewers producing zero to 5,000 HL annually and a formula-specific credit for those producing 5,001 to 15,000 HL. One hectolitre of beer is equivalent to two kegs of beer.

“There’s no doubt the popularity of microbreweries is on the rise here in Canada. They’re creating local jobs and providing world class beers to Canadians from coast to coast,” said Brian Masse, the NDP’s small business critic.

“This tax credit will allow these entrepreneurs to produce more, hire more and generate more revenue that will go right back into helping their small businesses and drive the Canadian economy,.”

“With a focus on unique flavour and brewing techniques, Canadians are falling in love with their local microbreweries,” added BC Southern Interior MP Alex Atamanenko.  “I am very proud that the NDP is supporting this growing market and our local breweries.”

Microbreweries account for six per cent of the market share in Canada, a number that is estimated to triple in the coming years.

The bill introduced by Masse last week could take a while to get legs. It’s quite far down on the parliament’s order of precedence, although the NDP is hoping the governing Conservatives will lift the idea behind the bill or put it in a budget.

Private members bills and motions are ideas introduced in parliament the public can rally behind to petition or pressure the government to act upon.

Depending on their levels of production, the Rossland Beer Company and Nelson Brewing Company are two microbreweries that might stand to benefit from the tax credit.

The Rossland Beer Company began operating in the summer of 2012 as Trail Brewing and has since moved to Rossland, establishing a shop front in Sourdough Alley nine months ago. The craft brewery currently brews around 50 to 60 HL per week or approximately 3,120 HL per annum.

Petri Ratio of Rossland Beer Company said this move would be a step in the right direction.

“It’s super encouraging for the industry. It encourages people to get involved. The tax credit break would be great,” he said.

Statistics show an estimated ten million Canadians drink beer and an estimated 21.9 million HL are produced annually making it the number one alcoholic beverage in Canada in terms of both production and consumption.

In 2013, Canada sold over 19 million HL of domestic beer alone — this does not account for imported beer. Beer and liquor stores and agencies sold $21.4 billion worth of alcoholic beverages during the fiscal year ending March 31, 2013, up 2.2 per cent from the previous year. Beer remained the alcoholic drink of choice for Canadians, with $9.1 billion in sales.