Minister of Finance Jim Flaherty today tabled the 2014 Federal Budget (the “Budget”) entitled The Road to Balance: Creating Jobs and Opportunities. We are pleased to provide our summary of proposed tax measures contained in the Budget.
There were no changes proposed to corporate income tax rates or to personal income tax rates. There were certain favourable changes to tax credits available to individuals.
The Federal Government continued its focus on integrity and tax fairness measures, sometimes described by the Federal Government as closing tax loopholes, albeit to a lesser extent than in past years. Some of the proposed measures appear to be based on changed policy rationale rather than addressing technical deficiencies in the Income Tax Act (Canada) (the “Tax Act”). The revenues that are projected to be raised through integrity measures contained in the Budget total $1.765 billion over the next five years compared with 5-year revenue projections relating to integrity measures proposed in the 2013 budget and the 2012 budget of $6.066 billion and $3.131 billion respectively.
The Budget contains certain proposed and potential upcoming changes in the areas of international taxation, trusts and the charitable and not-for-profit sectors. Certain of the proposed international tax measures specifically target arrangements perceived by the Federal Government to erode the Canadian tax base.
From a fiscal perspective, the Budget reports a much improved budgetary balance than was projected in the 2013 budget. In particular, the Budget forecasts a deficit of $16.6 billion for 2014 (compared to a 2014 deficit of $18.7 billion that was projected in the 2013 budget), a deficit of $2.9 billion for 2015 (compared to a 2015 deficit of $6.6 billion that was projected in the 2013 budget) and a surplus of $6.4 billion for 2016.
Our summary of tax highlights contained in the Budget follows.