Federal and Provincial Budgets

As expected, the June 6, 2011 federal budget contains the same tax measures previously announced in the March 22, 2011 budget. Any that were to have become effective on or after "Budget Day" become effective on or after March 22, 2011.

The June 6 budget announced that the federal government will ask the House of Commons Standing Committee on Finance to undertake a study of charitable donation incentives. We will provide more details if developments warrant.

The federal budget that Minister of Finance Jim Flaherty presented on March 22, 2011, may well be defeated when it comes before the House of Commons, triggering an election. Even so, many of its measures are likely to be re-introduced later.

Full Commentary

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Highlights

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PwC’s 2011 proposals for the Minister’s consideration

2011 Federal Budget Submission (January 24, 2011)

Our Instant Reactions

• 4:59 p.m. EST: The Federal Government announced today plans to attract more health care workers to underserved rural and remote communities by forgiving 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.
• 4:56 p.m. EST: The Government today announced new measures to improve the quality of life and expand opportunities for older Canadians, including enhancing the Guaranteed Income Supplement (GIS) for those seniors who rely on their Old Age Security and the GIS and may be at risk of experiencing financial difficulties. This measure will provide a new annual top-up benefit of up to $600 for single seniors and $840 for couples. It represents an investment of more than $300 million per year, and will improve the financial security of more than 680,000 seniors across Canada.
  Other measures for seniors include:
  
  • Enhancing the New Horizons for Seniors Program with $10 million over two years to support projects that ensure seniors contribute to and benefit from activities in their communities.
  • Changing federal rules to eliminate the mandatory retirement age for federally regulated employees in order to give older workers wishing to work the option of remaining in the workforce.
• 4:54 p.m. EST: New initiatives proposed in today's 2011 Federal Budget announcement include funding for the growth and development of some of Canada's key industry sectors, these measures include:
  
  • Announcing a two-year, $50-million Agricultural Innovation Initiative to support knowledge creation and transfer and increased commercialization of agricultural innovations.
  • Supporting the transformation of the forestry sector by proposing to provide $60 million in 2011-12 to help forestry companies innovate and tap into new opportunities abroad.
  • Extending the temporary 15-per-cent Mineral Exploration Tax Credit for an additional year (until March 31, 2012) to continue to help companies raise capital for mineral exploration.
• 4:52 p.m. EST: The Federal Government today legislated a permanent annual investment of $2 billion in the Gas Tax Fund to help provide long-term infrastructure funding for municipalities. Other public infrastructure measures include:
  
  • Providing $228 million over three years to fund repairs and major maintenance to federal bridges in Greater Montréal.
  • Investing $148 million over the next five years to maintain bridges, dams and other specialized federal assets managed by Public Works and Government Services Canada across Canada.
  • Providing up to $72 million over three years for repairs to storm-damaged small craft harbours.
  • Contributing $150 million toward the construction of an all-season road between Inuvik and Tuktoyaktuk that completes the Dempster Highway, connecting Canadians from coast to coast to coast.
• 4:50 p.m. EST: Today the Federal Government introduced legislation to reinforce the stability of Canadian housing finance and strengthen the mortgage insurance regime. It also plans to move forward on the recommendations of the Task Force on Financial Literacy to appoint a Financial Literacy Leader to promote national efforts.
  
  Other measures include a new consumer protection initiative which will ban unsolicited credit card cheques and develop new rules related to network-branded prepaid cards.
• 4:48 p.m. EST: The Finance Minister is looking to streamline Canada’s trade instruments, including an overhaul of the Customs Tariff legislation to reduce the processing burden for Canadian business. A second measure extends the temporary powers of Export Development Canada to provide financing support to Canadian exporters in the domestic market.
• 4:45 p.m. EST: The Federal Government has announced it will provide renewed funding of almost $100 million over two years for the research and development of clean energy and energy efficiency. It will also provide $8 million over two years to help deploy clean tech initiatives in Aboriginal and Northern communities.
  Other measures include expanding the eligibility for accelerated write-offs for clean energy generation equipment and matching deduction rates for certain intangible expenses such as acquiring resource rights, costs of clearing land or removing overburden prior to excavating a mine, with the rates in the conventional oil and gas sector.
• 4:43 p.m. EST: Small business incentives include a new one-time Hiring Credit of up to $1,000 against an increase in a small firm’s Employment Insurance (EI) premiums over those paid in 2010 which the Government hopes will encourage hiring.
  Other measures include providing $80 million in new funding over three years through the Industrial Research Assistance Program to help small and medium sized businesses accelerate adoption of new technologies through joint projects with colleges.
  The government is also aiming to reduce red tape and lessen the compliance burden on small business through the Red Tape Reduction Commission and upgrading the BizPaL service for small businesses.
• 4:42 p.m. EST: The Federal Government has extended the temporary accelerated capital cost allowance rate for investment in manufacturing and processing machinery and equipment acquired before 2014.
• 4:40 p.m. EST: Budget 2011 follows through on the Government’s commitment in 2010 to improve the integrity and fairness of the tax system by closing loopholes that allow a few businesses and individuals to avoid paying their fair share of tax. These proposed measures will protect the Government’s revenue base—which helps keep tax rates low—and reaffirm the Government’s ongoing commitment to tax fairness. Of note is that deferrals of partnership income will be limited by requiring corporations that have a significant interest in a partnership with a fiscal period ending on a date different from the corporation’s year-end, to report partnership income on an accrual basis.
• 4:35 p.m. EST: The Finance Minister in Year 3 of Canada’s Economic Action Plan emphasized sustainable actions for long term prosperity including investments in job creation, support for families and communities, innovation, education and training and a return to balanced budgets without raising taxes. The actions announced today aim to build on the stimulus plan and reinforce Canada’s competitive advantage.
  
  Notable actions include:
  
  • Providing a one-time Hiring Credit for Small Business of up to $1,000 to encourage hiring
  • $80 million in new funding to help small and medium sized businesses accelerate technology adoption through the Industrial Research Assistance Program
  • Support for seniors by providing top up benefits on the Guaranteed Income Supplement of over $300 million per year
  • Close to $100 million of renewed funding for research and development of clean energy and more than $870 million for Canada's Clean Air Agenda over two years
  • An overhaul of the Customs Tariff legislation to reduce the processing burden for Canadian business
  • Public infrastructure support through a permanent annual investment of $2 billion in the Gas Tax Fund
  • Support for key industries with targeted actions in agriculture, forestry, mining, manufacturing and processing

“I am announcing that we are forecasting today a deficit of $3.8 billion in 2011-2012 and $1.5 billion in 2012-2013, and that the Québec government’s budget will be balanced as planned in 2013-2014,” declared Finance Minister Raymond Bachand. Get PwC's analysis.

PwC's Full Budget Commentary

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PwC's budget highlights

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On Tuesday, March 29, 2011, Ontario’s Minister of Finance, Dwight Duncan, presented the province’s 2011 budget. The budget does not change personal income tax rates, the previously announced corporate income tax rate reductions or Harmonized Sales Tax rates. It does include numerous technical amendments, many of which are intended to improve the administration of the tax system, although few details are provided regarding many of these amendments.

PwC's budget highlights

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On March 23, 2011, Saskatchewan’s Minister of Finance, Ken Krawetz, presented the province’s 2011 budget. Get PwC's analysis.

PwC's budget highlights

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On April 12, 2011, Manitoba’s Minister of Finance, Rosann Wowchuk, presented the province’s 2011 budget. Of interest to business, the budget introduces a capital tax exemption for small banks, enhances existing tax credits and introduces tax credits that assist Manitoba printers and encourage certain charitable activities. For individuals, the budget increases and extends several tax credits and introduces a Children’s Arts and Cultural Activity Tax Credit.

PwC's budget highlights

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