The Federal budget was tabled in the House of Commons on March 4, 2010. The budget includes $19 billion in stimulus spending, including $3.2 billion in personal income tax relief. There is also specific mention of a number of corporate tax matters.
The following are some highlights:
- No new corporate tax reductions were mentioned; however, Canada is on course to have the lowest corporate tax rate in the world by 2012.
- Acknowledgement was made to make it easier to transfer losses within a corporate group. The government will consider introducing a formal system of loss transfer rules or consolidated reporting.
- Child benefits. The budget proposes to allow two eligible individuals to each receive one-half of Canada Child Tax Benefits, Universal Child Care Benefits, and GST/HST credit amounts in respect of a child where the child lives with both individuals, who live separately.
- Child benefits. Beginning in 2010 a single parent will have the option of including the aggregate Universal Child Care Benefit in his/her own income, or the income of certain dependents.
- Medical expenses tax credit. Starting March 5, 2010, medical expenses for purely cosmetic purposes will not be eligible for this credit.
- The budget proposes a relieving measure for foreign investors by reducing the tax reporting and filing requirements under section 116 of the Income Tax Act. As a result, section 116 requirements will no longer apply to most share investments in private and public companies.
- The foreign investment entities (FIE) rules that apply to offshore investment fund property and non-resident trusts have been dramatically overhauled, and are now to be modeled on the offshore investment fund property regime currently found in section 94.1.
- The non-resident trust (NRT) proposals were revised (subject to a two-month consultation period), thus taking into account the vast majority of Canadians who believed that the previous proposals were overly complex.
Please see Ernst & Young’s Tax Alert, which provides a detailed analysis of the 2010 Federal Budget at: http://www.ey.com/CA/en/Services/Tax/Tax-Alerts