2018 Canadian Federal Budget Commentary by D&H Group
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.
