Federal and Provincial Budgets

• Tightening of tax rules on stock options to eliminate tax reduction arrangements.
• Consultation for a new reporting regime for aggressive tax avoidance transactions.
• New rules to counter schemes often referred to as “foreign tax credit generators” that are designed to shelter tax otherwise payable.
• Ensure that income trust conversions into corporations are subject to the same loss utilization rules that currently apply to similar transactions involving only corporations.
• Limitations to tax ability of cosmetic medical expenses.

5:07 p.m. EST: Federal Government moves ahead to establish Canadian securities regulator for financial sector: As Canada’s strong financial sector is a key component of its ongoing economic recovery, new measures were introduced today in an effort by the Government to help support the nation’s competitive industry, these included:

• Ongoing commitment to establish a Canadian securities regulator within the next three years.
• Moving ahead with a Code of Conduct for the Credit and Debit Card Industry in Canada.
• Introduction of a legislative framework to enable credit unions to incorporate and continue federally, in an effort to promote the continued growth and competitiveness of the sector and enhance financial stability.

5:05 p.m. EST: New ‘green’ initiatives help promote clean energy investments and technologies: Budget 2010 introduced certain measures today to drive Canada’s position as an energy leader through encouragement of investment in energy projects and clean energy generation. The budget also includes measures to preserve Canada’s natural heritage through environmental protection in the North and further protection of the Great Lakes.

Notable actions include:

• Establishing the Next Generation Renewable Power Initiative, with $100 million over the next four years to support the development, commercialization and implementation of advanced clean energy technologies in the forestry sector.
• Modernizing the regulatory system for project reviews, and supporting consultation with Aboriginal peoples on major resource projects.
• A 50% declining balance capital cost allowance for green energy including heat recovery and distribution systems and other clean energy generation assets.

• Making Canada a tariff free zone for industrial manufacturers by eliminating all remaining tariffs on machinery and equipment and goods imported for further manufacturing – a savings of $300 million in annual duty for Canadian business, to support investment and growth and create jobs.

4:50 p.m. EST: Measures to help Canada compete will aid the economic recovery: The Federal Budget announced today delivered new measures that are geared to improving Canada’s financial position and competitiveness globally. Notable actions include:

• The lowest overall income tax rate on new business investment in the G7 (25% by 2012)
• Making Canada a tariff free zone for industrial manufacturers by eliminating all remaining tariffs on machinery and equipment and goods imported for further manufacturing - a savings of $300 million in annual duty for Canadian business.
• Improvements to Canada's system of international taxation to facilitate investment, cut red tape, and streamline the compliance process associated with the taxation of cross-border activity.
• Establishing a new Red Tape Reduction Commission.
• Enhancing the quality of the financial services sector.

These measures are designed to encourage local and new foreign investments in Canada.

4:40 p.m. EST: Recalibration of government spending key to achieving a balanced budget Budget 2010 sets the stage for deficit reduction in the future while completing the Stimulus Program is the current focus. Budget 2010 includes savings measures of $17.6 billion over the next five years. These savings stem from restraining growth in National Defence Spending and International Assistance Envelope while containing the administrative cost of Government.

Cost containment will be achieved through a comprehensive review of government administrative functions and overhead costs in order to identify opportunities for additional savings and improve service delivery. The focus of which will be in three key areas: 1) increasing efficiency and effectiveness, 2) focusing on core roles and 3) meeting the priorities of Canadians.

Roxanne Anderson, Lead Partner of Federal Government of Canada Services states:

“Modernizing the manner in which the Government operates and delivers service will be critical to the Government being able to meet its savings objectives outlined in Budget 2010.

Debate will continue about the right mix of revenue enhancing actions versus spending reducing options – the end result should be a sustainable deficit reduction plan to restructure costs without sacrificing the quality of services that Canadians value.”

4:25 p.m. EST: Staying the course – continued stimulus, job creation and focus on a balanced budget The actions announced today by the Federal Government in Year 2 of Canada’s Economic Action Plan aim to stay the course of economic recovery with a budget geared towards the continuation of the stimulus package, job creation and balancing the budget. Improving Canada’s international competitive position will assist the economic recovery.
Notable actions include:

• Continuation of the stimulus package: $19 billion in new federal stimulus to create and maintain jobs; temporary measures will be wound down as planned.
• Reduced barriers for businesses: making Canada a tariff-free zone for manufacturers – a savings of $300 million to Canadian business.
• Other key measures include: encouraging investments in energy projects and clean energy generation, further strengthening of the financial sector by moving forward toward a Canadian securities regulator and reducing red tape and compliance costs for Canadian businesses.
• Spending restraint through targeted measures: a proposal of $17.6 billion in savings over five years.
• Review of government overhead administrative functions and overhead costs.
• Extension of the Mineral Exploration and Tax Credit (METC) to March 31, 2011.
• Launch of a new Small and Medium-Sized Enterprise Innovation Commercialization Program with $40 million over two years.