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The budget proposes to increase the non-refundable tax
credit for adoption expenses for 2014 from $11,774 to $15,000 per child,
indexed to inflation after 2014.
Medical Expense Tax Credit (METC)
The budget proposes that amounts paid for the
design of an individualized therapy plan for an individual
eligible for the Disability Tax Credit be eligible for the METC if the
cost of the therapy itself would be eligible for the METC and certain
conditions are met. This measure will apply to expenses incurred in
2014 and later years.
Search and Rescue Volunteers Tax Credit
The budget proposes to allow search and rescue
volunteers to claim a 15% non-refundable tax credit based on an amount of
$3,000, starting in 2014. This equates to a tax reduction of $450.
An eligible individual will be a S&R volunteer
who performs at least 200 hours of volunteer S&R services in a
taxation year, consisting primarily of responding to and being on call
for S&R and related emergencies, attending meetings held by the
S&R organization, and participating in required training related
Volunteer S&R service hours will be ineligible
if the individual also provides S&R services, otherwise than as a
volunteer, to that organization.
An individual who performs both eligible volunteer
firefighting services and eligible volunteer S&R services for a
total of at least 200 hours in the year will be able to claim either
the Volunteer Firefighters Tax Credit (VFTC) or the SRVTC.
An individual who claims the VFTC or the SRVTC will
be ineligible for the existing tax exemption of up to $1,000 for
honoraria paid by a government, municipality or public authority to an
emergency services volunteer.
Written certification may be required.
Pension Transfer Limits
The pension transfer limit formula in the Income Tax
Act determines the portion of a lump-sum commutation payment from a
defined benefit RPP, received by a plan member who is leaving the RPP,
that may be transferred to an RRSP on a tax-free basis. Generally,
in situations where a plan member's commutation payment is reduced due to
plan underfunding, the transferable amount is based on that lower
commutation payment, and the portion of a plan member's commutation
payment that exceeds the transferable amount must be included in the
taxpayer's income for the year in which it is received.
A special rule was introduced in 2011 that applied in
limited circumstances regarding insolvent employers where the RPP is being
wound up, that allowed the maximum transferable amount to be the same as
if the RPP were fully funded.
The budget proposes to allow this special rule to apply
in additional situations:
where the plan is an RPP other than an IPP, the
reduction in the estimated pension benefit that results in the reduced
commutation payment is approved pursuant to the applicable pension
benefits standards legislation; or
where the plan is an IPP, the commutation payment
to the plan member is the last payment made from the plan (i.e., the
plan is being wound up).
The application of this rule must be approved by the
Minister of National Revenue. This measure will apply in respect of
commutation payments made after 2013.
The budget proposes to eliminate the need for an
individual to apply for their GST/HST Credit and to allow the CRA to
automatically determine if an individual is eligible to receive the
Tax on Split Income
The Income Tax Act contains rules which reduce the
ability of a higher-income taxpayer to split taxable income
inappropriately with lower-income individuals. One of these rules is
referred to as the "tax on split income". The highest
marginal tax rate (currently 29%) applies to "split income" paid
or payable to a minor, which generally includes:
taxable dividends (and shareholder benefits)
received directly, or indirectly through a partnership or trust, in
respect of unlisted shares of Canadian and foreign corporations (other
than shares of a mutual fund corporation);
capital gains from dispositions of those types of
shares to persons who do not deal at arm's length with the minor; and
income from a partnership or trust that is derived
from providing property or service to, or in support of, a business
carried on by a person related to the minor or in which the related
The budget proposes that the definition "split
income" in the Income Tax Act be modified to include income that is,
directly or indirectly, paid or allocated to a minor from a trust or
the income is derived from a source that is a
business or a rental property; and
a person related to the minor
is actively engaged on a regular basis in the
activities of the trust or partnership to earn income from any
business or rental property, or
has, in the case of a partnership, an interest
in the partnership (whether held directly or through another
This measure will apply to the 2014 and subsequent
taxation years. It is included in the August 29, 2014 draft
The budget proposes to allow income that is contributed
to an amateur athlete trust to qualify as earned income for the purpose of
determining the RRSP contribution limit of the trust's beneficiary.
This will apply to contributions made after 2013. In addition,
individuals who contributed to an amateur athlete trust before 2014 will
be permitted to make an election to have income that was contributed to
the trust in 2011, 2012 and 2013 also qualify as earned income. Any
additional RRSP room will be added to the individual's RRSP contribution
room for 2014. The election must be in writing and submitted to
Canada Revenue Agency on or before March 2, 2015. This proposal is
included in the August 29, 2014 draft legislation.
apply flat top-rate taxation to grandfathered inter
vivos trusts, trusts created by will and certain estates.
Graduated rates will apply for the first 36
months of an estate that arises on and as a consequence of an
individual's death and that is a testamentary trust.
Graduated rates will continue to be provided in
respect of testamentary trusts having as their beneficiaries
individuals who are eligible for the federal Disability Tax
Testamentary trusts (other than estates for their
first 36 months) and grandfathered inter vivos trusts will not benefit
from special treatment under a number of related tax rules, in
an exemption from the income tax instalment
an exemption from the requirement that trusts
have a calendar year taxation year and fiscal periods that end in
the calendar year in which the period began
the basic exemption in computing alternative
preferential treatment under Part XII.2 of the
Income Tax Act (tax on designated income of certain trusts)
classification as a personal trust without
regard to the circumstances in which beneficial interests in the
trust have been acquired
the ability to make investment tax credits
available to a trust's beneficiaries, and
a number of tax administration rules that
otherwise apply only to ordinary individuals.
Testamentary trusts that do not already have a calendar
year taxation year will have a deemed taxation year-end on December 31,
2015 (or in the case of an estate for which that 36-month period ends
after 2015, the day on which that period ends).
This measure will apply to the 2016 and subsequent
Donations of Ecologically Sensitive
Budget 2014 proposes to extend to 10 years (from 5
years) the carry-forward period for donations of ecologically sensitive
land, or easements, covenants and servitudes on such land. This
measure will apply to donations made on or after February 11, 2014.
Certified Cultural Property
The budget proposes to remove, for certified cultural property acquired as part of a tax shelter gifting arrangement, the exemption from the rule that deems the value of a gift to be no greater than its cost to the donor. Other donations of certified cultural property will not be affected by this measure.
This measure will apply to donations made on or after February 11, 2014.
Where an individual makes a donation by
will, the donation is treated for tax purposes as having been made
immediately before death. The treatment is the same where a
qualified donee is designated as the beneficiary under an RRSP, RRIF, TFSA
or life insurance policy. In these circumstances, the Charitable
Donations Tax Credit (CDTC) may be applied against only the individual's
income tax otherwise payable.
For a donation made by an individual's
estate, the CDTC may be applied against only the estate's income tax
The budget proposes that, for the 2016
and subsequent taxation years, donations by will and designation donations
will be deemed to have been made by the estate, at the time at which the
property that is the subject of the donation is transferred to a qualified
donee. This proposal is included in the August 29, 2014 draft
Also, the available donation will be
allowed to be allocated among any of:
the taxation year of the estate in
which the donation is made;
an earlier taxation year of the
the last 2 taxation years of the
The current limits that apply to determine the total
donations that are creditable in a year will continue to apply. A
qualifying donation will be a donation effected by a transfer, within the
first 36 months after the individual's death, of property to a qualified
An estate will continue to be able to claim a CDTC in
respect of other donations in the year in which the donation is made or in
any of the 5 following years.
Extension of the Mineral Exploration
Tax Credit for Flow-Through Share Investors
Budget 2014 proposes to extend eligibility for the
Mineral Exploration Tax Credit for one year, to flow-through share
agreements entered into on or before March 31, 2015.
Remittance Thresholds for Employer Source Deductions
The budget proposes to reduce the frequency of remittance of source
deductions for employers, regarding amounts to be withheld after 2014, as
increase the threshold level of average monthly withholdings at
which employers are required to remit up to 2 times per month from
$15,000 to $25,000; and
increase the threshold level of average monthly withholdings at
which employers are required to remit up to 4 times per month from
$50,000 to $100,000
Tax Incentives for Clean Energy Generation
Budget 2014 proposes to expand Class 43.2 to include water-current energy equipment and equipment used to gasify eligible waste fuel for use in a broader range of applications.
This measure will apply to property acquired on or after February 11,
2014, that has not been used or acquired for use before that date.
This measure is included in the August 29, 2014 draft legislation.
Consultation on Eligible Capital Property
The budget announces a public consultation on a proposal to repeal the
existing eligible capital property (ECP regime, replace it with a new
capital cost allowance (CCA) class available to businesses, and transfer
taxpayers' existing cumulative eligible capital (CEC) pools to the new CCA
class. Detailed draft legislative proposals will be released for
comment at an early opportunity.