Making Canada a Social Enterprise Tax Haven

While millennials appear motivated to support the evolution of stakeholder capitalism and solve challenging social problems via entrepreneurship, the challenges they face as business founders are also greater than those experienced by previous generations. Canadian start-ups can experience significant challenges when trying to secure financing, which is why some of our best and brightest entrepreneurs relocate to the United States. In Canada, there are three categories of business incorporation: charity, non-profit, and for-profit. Charities and non-profits are heavily reliant upon government grants, but they pay no taxes because they exist to contribute to society. Social enterprises are required to incorporate as for-profit ventures and so they pay the corporate tax rate. Now imagine a Canada with a fourth category of incorporation, one designed to give social enterprises the same tax benefits that are offered to charities and non-profits. This fourth “social enterprise” category could make our nation a tax haven for social entrepreneurship. Instead of pushing entrepreneurs away, Canada would attract top social entrepreneurial talent from the global talent pool. In addition, this simple policy adjustment has the potential to mitigate long-term fallout from pandemic measures that have left too many entrepreneurs struggling to survive.

• Canadian economic strategy, millennial entrepreneurs, Canadian social enterprises, social entrepreneurs