With every new year comes a new federal budget. This year, the budget includes $22.8 billion in additional spending over the next five years for the enhancement of existing tax credits and incentives and the addition of new ones, additional resources for the Canada Revenue Agency (CRA) to recover unpaid taxes, new measures to reduce tax evasion and avoidance, improving savings plans for retirees and those with disabilities and introducing a national prescription drug plan.
With additional spending and revenues, the federal government expects that the result of the plan will be an increase of the federal deficit to $20 billion in 2019-2021, followed by a decline to $9.8 billion by the end of the next five years.
As with every budget, measures are proposed that will affect businesses, individuals, and families as well as international transactions, sales tax, excise taxes and more.
Specific measures that taxpayers should be aware of include:
- Increased access to the enhanced scientific research and experimental development tax credit.
- Qualified donee status for Canadian journalism organizations.
- Refundable Labour Tax Credit for newsroom employees.
- Changes to the Canadian Film or Video Production Tax Credit.
- Relief to the Small Business Deduction for Farming and Fishing.
- New CCA (capital cost allowance) classes and first-year rates for zero-emission vehicles.
- Additional exceptions to prevent taxpayers from artificially converting income into capital gains.
- Limits to employee stock option benefits.
- An increase in RRSP withdrawal amounts for the First Time Home Buyers’ Plan.
- Introduction of the Canadian Training Credit.
- Exclusion of Kinship Care Assistance Payments from income for the purpose of determining eligibility for credits and benefits.
- Elimination of national-importance requirement for donations of cultural property.
- Additional protection of long-term savings for those with disabilities.
- Allowing new types of annuities for certain registered plans.
- Addition of Digital Subscription Tax Credit.
- Preferred capital gains tax for multi-unit residential property owners.
- Cannabis products may be eligible for Medical Expense Tax Credit.
- Prioritization of transfer pricing rule adjustments.
- Expansion of reassessment period for transfer-pricing transactions.
- Expansion of Foreign Affiliate dumping rules to Corporation Residents in Canada controlled by non-resident individual, trust or group of persons.
- Additional GST/HST relief for human ova and in vitro embryos.
- Added GST/HST relief for podiatrists and chiropodists for zero-rated foot-care devices.
- GST/HST exemption for services rendered by a team of health professionals.
- Imposition of excise duties on cannabis extracts and topicals.
- Addition of the Employment Insurance Training Support Benefit.
- Improving digital services at the CRA.
- Providing timelier resolutions to taxpayer objections.
- Greater assistance for new businesses with regard to tax obligations.
- Improving assistance for incorporated businesses.
- A dedicated phone line for tax practitioners at the CRA.
- Reducing process time for T1 post-filing adjustments.
- Increased pursuance of complex real estate transactions where taxes were not paid.
- Full expensing for manufacturing and processing equipment.
- Full expensing of clean energy equipment.
- Expanded Mineral Exploration Tax Credit.
- New reporting requirements for family trusts.
Over the next few weeks, we will be discussing each of these changes, as well as others, in depth.
To find out how the federal budget will affect your tax situation as a business or individual, contact us today.
