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March 22 marked the release of the 2017 federal budget (Budget) of the Justin Trudeau Liberal Government. The Budget was clearly impacted by the shift in policies of the recently elected US President and his administration. Accordingly, the Budget adopted a very cautious approach to revenue generation and new spending initiatives, as it is unclear what financial impact these changing US policies will eventually have on Canada’s economy.
The Budget announced no change to the tax rates for individuals or for corporations. Furthermore, the rumoured change to the 50% capital gains inclusion rate was left untouched. The spending measures announced in the Budget were for the most part an elaboration of those initiatives publicized in the 2016 federal budget.
The Budget reaffirmed the federal government’s commitment to reducing income tax evasion and improving income tax compliance. At the same time, the Budget announced that the federal government would release a paper in the next few months which will outline its views on the use of private corporations to achieve certain tax planning strategies which it considers inappropriate, and its proposed policy responses to address such issues.
The Budget announced the following significant amendments to the income tax and excise tax system:
1) Eliminating the deduction for work in progress of certain professionals over a two year period.
2) Clarifying the rules concerning de facto control.
3) The timing of recognition of gains and losses on derivative contracts.
4) Simplification of the caregiver tax credit system.
5) Imposing GST to the provision of ride sharing services such as Uber.
Details of the contents of the Budget follow. We encourage you to discuss the contents of this Budget and how it impacts your tax situation with your Zeifmans advisor at 416.256.4000 or email info@zeifmans.ca.
