TAG Tax

On February 27th Finance Minister Bill Moreneau presented the 2018 Federal Budget titled “Equality and Growth”. The budget includes a focus on growing government revenues by increasing economic participation among women, visible minority Canadians and persons with disabilities, as well as substantial long-term investments in science and technology. The government suggests that increasing equality for women and enhancing women’s participation in the workplace (especially in technology and trades) could add $150 billion to the Canadian economy over the next decade.

Highlights include:

• Reducing the small business tax rate to 10 per cent effective January 1, 2018 and 9 per cent as of January 1, 2019 (previously announced)
• Additional reporting requirements for trusts (effective 2021 tax year)
• Extending eligibility for accelerated capital cost allowance for certain clean energy equipment
• Enhancing and renaming the Working Income Tax Benefit (starting 2019)
• Annual indexation of the Canada Child Benefit (starting July 1, 2018)
• “Use it or lose it” EI parental benefits (expected availability June 2019)
• Reducing access to the small business tax rate for businesses with high passive investment income (expected to apply 2019)
• Applying GST/HST to management and administrative services provided to an investment limited partnership by the general partner (after September 8, 2017)
• Additional new measures to prevent tax avoidance
• Adjusting tobacco excise duty rates annually (starting April 1, 2019)
• Grants and funds to attract women to “Red Seal” trades and construction (starting 2018–19)
• Pre-apprenticeship assistance for underrepresented groups (starting 2018–19)

The Finance Minister has not set a timeline for balancing the budget, but has substantially reduced the projected annual deficits through 2022–23 and expects the net debt-to-GDP ratio to decline over the period as well. The previously projected deficit for 2017–18 was $28.5 billion and now sits at $19.4 billion. Similarly, the projected deficit for 2021–22 was $18.8 billion and has been revised down to $13.8 billion. The net debt-to-GDP ratio is currently 31 per cent and is projected to decline to 28.4 per cent by 2022–23.

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