Federal and Provincial Budgets

John Gravelle discusses how the budget will increase the tax bill for miners

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In anticipation of the 2013 Federal Budget: Looking back … and forward

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2012 in Review: Canadian Tax Highlights

Canada’s Minister of Finance, Jim Flaherty, tabled the federal budget on March 21, 2013. Learn about important new measures and what they mean for you.

2013 Federal Budget Instant Reactions

• Canada gets a face lift - New Building Canada Plan provides more than $53B in funding for infrastructure projects   
  • Economic Action Plan 2013 proposes to provide federal support of over $53 billion, including more than $47 billion in new funding over 10 years, starting in 2014-15, for provincial, territorial and municipal infrastructure projects. The new Building Canada Plan will centre on three key funds:
    • Community Improvement Fund – $32.2 billion consisting of an indexed Gas Tax Fund and the incremental GST Rebate for municipalities to build roads, public transit, recreational facilities and other community infrastructure across Canada that will improve the quality of life of Canadian families.
    • New Building Canada Fund – $14 billion in support of major economic infrastructure projects that have a national, regional and local significance.
    • Renewed PS Canada Fund - $1.25 billion to continue supporting innovative ways to build infrastructure projects faster and provide better value for Canadian taxpayers through public-private partnerships.
      
• Government helps Southern Ontario prosper with new $200M Advanced Manufacturing Fund
  • To support the efforts of manufacturers in Ontario to become more competitive, the Economic Action Plan 2013 proposes to provide $200 million over five years for the creation of an Advanced Manufacturing Fund. The new Fund would support investments by manufacturing firms in activities that create new and innovative products or production methods, such as prototyping, demonstration projects and advanced product testing, and will be delivered by the Federal Economic Development Agency for Southern Ontario as part of its renewed funding.
    
• Manufacturers breathe a sigh of relief with a $1.4 billion tax relief
  • The Federal Government is offering  $1.4 billion of tax relief for Canada’s manufacturing and processing sector by extending the temporary accelerated capital cost allowance for new investment in manufacturing and processing machinery and equipment made in 2014 or 2015.
    
•  Nearly 130,000 Canadians/yr to prepare for skills training with the introduction of the Canada Job Grant
  • The Economic Action Plan 2013 announces that the Government will transform skills training in Canada through the introduction of the Canada Job Grant, as part of the renewal of the Labour Market Agreements in 2014-15. Upon full implementation of the Grant, nearly 130,000 Canadians each year are expected to have access to the training they need to fill available jobs.
  • The Canada Job Grant could provide $15,000 per person or  more for training, which includes up to $5,000 in federal contributions. Federal contributions must be matched by both provinces/territories and employers. The Grant will be for short-duration training, and will include eligible training institutions, including community colleges, career colleges and trade union training centres.
    
• Attn grads: Government reduce barriers to apprenticeship and reallocate $19M to inform youth about fields of study with high labour needs
  • The Federal Government is reallocating $4 million over three years to work with provinces and territories to increase opportunities for apprentices by harmonizing requirements for apprentices, as well as examine the use of practical tests as a method of assessment, in targeted skilled trades.  This work will ensure more apprentices complete their training and encourage mobility.
  • The Economic Action Plan 2013 also proposes to reallocate $19 million over two years to inform young people about fields of study that are relevant to existing and forecasted demand for labour in particular occupations. The government will provide more information on the job prospects and benefits of working in various occupations, and will create new outreach efforts to promote careers in high-demand fields like science, technology, engineering and skilled trades.
    
• Government strengthens its support for workers with disabilities and Aboriginal peoples 
  • Budget 2013 announces that the Government will introduce a new generation of Labour Market Agreements for Persons with Disabilities by 2014 with an investment of $222 million per year. The reformed Agreements will be designed to better meet the employment needs of Canadian businesses and improve the employment prospects for persons with disabilities and will put stronger accountability regimes in place.
  • The Economic Action Plan 2013 also proposes $241 million over five years to improve the on-reserve Income Assistance Program to help ensure First Nations youth can access the skills and training they need to secure employment. The new First Nations Fund, totaling more than $109 million over five years, will fund the provision of personalized job training.
    
• Canada will kick-start the career paths of newcomers with the new Start-Up-Visa
  • The Government will launch its new Start-Up Visa, which is the first of its kind in the world. The new Start-Up-Visa is designed to attract innovative immigrant entrepreneurs to launch their companies in Canada to help create new jobs and spur economic growth.
    
• Budget 2013 fights tax evasion by funding  new Stop International Tax Evasion Program
  • The Canada Revenue Agency (CRA) will launch the Stop International Tax Evasion Program aimed at reducing international tax evasion and avoidance. Under this initiative, the CRA will pay rewards to individuals with knowledge of major international tax non-compliance when they provide information to the CRA that leads to the collection of outstanding taxes due. The CRA will pay a reward to an individual only if the information results in total additional assessments exceeding $100,000 in federal tax.
    
• Government’s strong stance against tax loopholes to provide about $4.4B in savings in the next 5 years
  • In total, actions in Economic Action Plan 2013 to close tax loopholes and improve the fairness and integrity of the tax system will provide about $315 million in savings in 2013-14, rising to over $1.2 billion in 2017-18, for a total of $4.4 billion over the next five years.
  • Examples of some of the steps taken in Economic Action Plan 2013 to improve the integrity of the tax system include:
    • Eliminating unintended tax benefits relating to leveraged insured annuities
    • Enhancing corporate anti-loss trading rules to address planning that avoids these rules
    • Further extending the application of Canada’s thin capitalization rules to Canadian residents trusts and non-resident entities
      
• Progressing to a more neutral tax system includes phasing out tax preferences for capital expenditures in mining sector
  • Economic Action Plan 2013 proposes to phase out the accelerated capital cost allowance for capital assets used in new mines and major mine expansions and to reduce the rate at which post-production mine development expenses may be deducted for tax purposes.
    
• Government spreading entrepreneurial love with $60M investment to enhance innovation hubs
  • In order to better support Canadian business accelerators and incubators – organizations that provide entrepreneurs with the resources, facilities and expertise needed to develop their business plan and seek financing – the Economic Action Plan 2013 proposes to provide $60M over five years to help outstanding and high potential incubator and accelerator organizations in Canada expand their services to entrepreneurs.
    
•  Say your goodbyes to the Labour-Sponsored Venture Capital Corporation tax credit  before 2017
  • Budget 2013 proposes to phase out the federal Labour –Sponsored Venture Capital Corporations (LSVCC) tax credit by 2017. This tax credit was introduced in the 1980s when access to venture capital for small and medium-sized businesses was limited. However, the economic environment and the structure of the venture capital market have changed greatly since that time.
  • The LSVCC tax credit has been criticized by academics, international organizations and venture capital industry stakeholders as being an ineffective means of stimulating a healthy venture capital sector. The government’s new approach will better target resources to the venture capital industry in order to create a sustainable and efficient private sector-led venture capital sector.
    
• 500,000 + small businesses to approx. reinvest $225M in job creation in 2013 with extension of  Hiring Credit 
  • In recognition of the role small businesses play as job creators in the Canadian economy, the Economic Action Plan 2013 proposes to expand and extend for one year the temporary Hiring Credit for Small Business. This temporary credit would provide up to $1,000 against a small firm’s increase in its 2013 Employment insurance (EI) premiums over those paid in 2012 to employers with total EI premiums of $15,000 or less in 2012. The temporary credit would be available to an estimated 560,000 employers, allowing these small businesses to reinvest approximately $225 million in job creation in 2013.
    
• New $20M pilot program will help small and medium-sized businesses access research  & business development services
  • Consistent with the recommendation of the Jenkins Panel, Economic Action Plan 2013 proposes to provide $20 million over three years for a new pilot program to be developed through The National Research Council’s Industrial Research Assistance Program (NRC-IRAP).
  • The pilot program will enable small to medium-sized enterprises to commercialize their products or services more quickly and effectively by providing them with credit notes to help pay for research, technology and business development services at universities, colleges and other non-profit research institutions of their choice.
    
• Government invests $37M  annually in research partnerships with business and academic researchers
  • The Economic Action Plan 2013 proposes to provide $37 million annually to support research partnerships with industry through the granting councils. This funding consists of three elements:
    • $15 million per year to the Natural Sciences and Engineering Research Council, including $12 million to enhance the College and Community Innovation Program
    • $15 million per year for the Canadian Institute of Health Research’s Strategy for Patient-Oriented Research
    • $7 million per year for the Social Sciences and Humanities Research Council. This funding will in part support research related to the labour market participation of persons with disabilities.
      
• Enhancements to SR&ED program include $5M CRA funding for more direct outreach and new in-person services
  • New funding of $5 million over two years will be provided to the Canada Revenue Agency to conduct more direct outreach with first-time  Scientific Research and Experimental Development (SR&ED) program claimants.
  • A new in –person service will be created to ensure new claimants have access to information about the SR&ED program’s eligibility requirements, the required supporting documentation and any other information needed to facilitate the filing of their SR&ED program claim. The CRA will also develop new web-based seminars that will be available to the SR&ED community at no cost.
    
• First time for everything – Government offers temporary First-Time Donor’s Super Credit 
  • The Economic Action Plan 2013 proposes a new temporary First-Time Donor’s Super Credit (FDSC) designed to encourage new donors to give to charity.
    
• Paying homage to veterans with $5M construction of Visitor Centre @ Canadian National Vimy Memorial
  • In honour of Canada’s 150^th upcoming birthday in 2017, the Government is taking steps to build a lasting legacy for this milestone. The Government is making a large investment to create the new Canadian Museum of History, and bring all of Canada’s museums together in a national network to share resources and highlight Canada’s historical past.
    
• Giving back to those in need – Government invests nearly $600M to the Homelessness Partnering Strategy 
  • Economic Action Plan 2013 proposes $119 million per year over five years, nearly $600 million in total, to the Homelessness Partnering Strategy using a ‘Housing First’ approach. This approach aims to move people rapidly from shelters and the streets into stable housing, while providing them with support for underlying mental health or addiction issues.
    
• Plans to modernize GPT regime will result in annual savings of $83M in 2014-15
  • Economic Action Plan 2013 follows through on last year’s commitment to review Canada’s General Preferential Tariff (GPT) regime. The Government is proposing effective January 1, 2015 to graduate 72 higher-income and trade competitive countries (e.g. Korea, China, Brazil) and renew the GPT for another 10-year period. Moving forward, beneficiary countries will be reviewed bi-annually on objective economic criteria to determine whether they remain eligible for GPT benefits.
  • This move towards modernizing the GPT regime will result in annual savings of $84 million in 2014-15, rising to $333 million in 2015-16, and ongoing for a total of $1.1 billion over the next five years.