Budget Highlights
- Canada’s economic action plan is on track to deliver $60 billion in stimulus funding; the majority of this support will wind down on March 31, 2011.
- New measures to support jobs:
- Providing small businesses with a temporary Hiring Credit of up to $1,000 against a small firm’s increase in its 2011 Employment Insurance (EI) premiums over those paid in 2010.
- Extending work-sharing agreements by up to 16 weeks so companies can offer EI benefits to workers willing to work a reduced work week.
- Renewing the Best 14 Weeks and Working While on Claim EI pilot projects for one year.
- Extending the Targeted Initiative for Older Workers to support training and employment programs for older workers.
- Enhancing the Guaranteed Income Supplement for those who rely exclusively on their Old Age Security and Guaranteed Income Supplement by providing a new annual top-up benefit of up to $600 for single seniors and $840 for couples.
- Forgiveness of up to $40,000 of the federal component of Canada Student Loans for new family physicians, and up to $20,000 for nurse practitioners and nurses.
- Enhancement and expansion of Canada Student Loans and Grants for part-time and full-time post-secondary students.
Personal Income Tax Measures
- Total net estimated costs for these measures are $35 million in 2010-11 and rising to $168 million in 2012.
- Non-refundable Tax Credits
- Children’s Arts Tax Credit – allows parents to claim a 15% tax credit based on an amount not exceeding $500 in artistic, cultural, recreational or development activities per child under 16 years of age.
- Volunteer Fire Fighters Tax Credit – allows volunteer fire fighters to claim a 15% tax credit based on an amount of $3,000.
- Family Caregiver Tax Credit – 15% tax credit based on an amount of $2,000 to be applied in 2012 to support caregivers of dependents with a mental or physical infirmity. This credit will be in addition to the amounts claimed under one of the existing dependency-related tax credits.
- Medical Expense Tax Credit – removes the $10,000-limit on eligible expenses that can be claimed for a dependent relative.
- Child Tax Credit eligibility – removes the rule that limits the number of child tax credit claimants to one per household.
- Tuition Tax Credit – expands costs eligible for the tuition tax credit to include fees paid to take an examination that is required to obtain a professional status recognized by statute or to be licensed or certified to practice a profession or trade in Canada.
- Tuition, Education and Textbook Tax Credit – reduces the minimum course-duration requirement that must be met by Canadian students studying abroad to three consecutive weeks from 13 weeks. Similar rules would apply to Educational Assistance payments.
- RESPs – allows transfers between individual Registered Education Savings Plans for siblings without tax penalties and without repayment of Canada Education Savings Grants, provided the beneficiary of a plan receiving a transfer of assets had not attained 21 years of age when the plan was opened.
- RDSPs – allows earlier access to savings in a Registered Disability Savings Plan for beneficiaries with shortened life expectancies without requiring the repayment of Canada Disability Savings Grants and Canada Disability Savings Bonds.
- RRSPs – proposes anti-avoidance rules to curtail the use of RRSPs in tax planning schemes including “RRSP strips” using rules similar to those that currently apply to Tax-Free Savings Accounts: the advantage rules, the prohibited investment rules and the non-qualified investment rules.
- Tax on Split Income – expanded to include capital gains realized by a minor on the disposition of shares of a corporation to a non-arms length person.
- Mineral Exploration Tax Credit – extended by one year for flow-through share agreements entered into on or before March 31, 2012.
- Individual Pension Plans – annual minimum amounts will be required to be withdrawn once a plan member attains the age of 72. Any contributions made to the plan that relate to past service must be funded first out of a member’s existing RRSP assets or by reducing the individual’s accumulated RRSP contribution room before new deductible contributions based on past service can be made.
- Administrative Changes:
- Individuals receiving the Canada Child Tax Benefit must notify the government of a marital change before the end of the month following the month in which the change in status occurs.
Charitable Sector
- Grants the CRA the ability to reassess the taxpayer to disallow a taxpayer’s claim for the Charitable Donations Tax Credit or Deduction in cases where property is returned to a donor.
- Requires that registered Canadian amateur athletic associations (RCAAA), municipalities, housing corporations providing low-cost housing for seniors, universities outside Canada whose student body ordinarily includes students from Canada to follow certain regulatory requirements that apply to registered charities. These entities would be required to be on a publicly available list maintained by Revenue Canada, and to maintain proper books and records and provide the CRA access to them.
- Gives the Minister of National Revenue the ability to refuse or revoke the registration of an organization or suspend its authority to issue official donation receipts if individuals controlling or managing the operations have been found guilty of an offence or has managed or controlled an organization whose registration has been revoked.
- In addition, RCAAAs would be required to follow many of the same rules that apply to registered charities:
- The issuance of official donation receipts, subject to rules and penalties
- Having the promotion of amateur athletics in Canada on a nation-wide basis as their exclusive purpose
- Be subject to monetary penalties if undue benefits are provided to any person
- Certain information and documents must be made available to the public by the CRA
Business Income Tax Measures
- Accelerated Capital Cost Allowance
- Manufacturing and Processing Sector – CCA Class 29 is to be extended for a further two years for eligible machinery and equipment acquired before 2014. Machinery and equipment acquired after 2013 would be included in Class 43.
- Expansion of Class 43.2 (Specified Clean Energy Generation and Conservation equipment) to include equipment that generates electricity using waste heat acquired on or after March 22, 2011.
- Oil Sands Properties
- Cost of oil sands leases and other oil sands resource property to be treated as a Canadian oil and gas property expense (deductible at 10% per year on a declining basis) rather than a Canadian development expense (deductible at 30% per year).
- Development costs for bringing new oil sands mines into production to be treated as a Canadian development expense rather than a Canadian Exploration expense (fully deductible in the year incurred).
- Corporations having significant interest in a partnership with a different fiscal year-end will be required to accrue income from the partnership for the portion of the partnership’s fiscal period that falls within the corporation’s taxation year. Transitional relief will be available to recognize the incremental amount gradually over the five taxation years that follow that first taxation year.
Customs Tariff Measures
- Facilitating low-value imports – the introduction of three new tariff items to ease the processing of low-value non-commercial imports arriving by mail or courier. These new tariff items will be subject to the generic, Most-Favoured-Nation tariff rates of 0%, 8% or 20% depending on the goods being imported.
Aboriginal Tax Policy – the government reiterates its willingness to discuss and put into effect direct taxation arrangements with interested Aboriginal governments, reflecting its support for the exercise of direct taxation powers by Aboriginal governments.
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