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Federal 2012 Budget - March 29, 2012 - and subsequent legislation

See the following on the 2012 Federal Budget, Department of Finance and Parliament websites:

Economic Action Plan 2012 - News Release

	Tax Measures Supplementary Information
	Notices of Ways and Means Motions March 29, 2012
	Notice of Ways and Means Motion and Explanatory Notes April 23, 2012
	News Release re Jobs, Growth and Long-term Prosperity Act April 26, 2012
	Bill C-38 Jobs, Growth and Long-term Prosperity Act received Royal Assent June 29, 2012

Notice of Ways and Means Motion and Explanatory Notes October 15, 2012

Bill C-45 Jobs and Growth Act October 18, 2012 re October 15 Notice of Ways and Means Motion received Royal Assent December 14, 2012

Notice of Ways and Means Motion and Explanatory Notes October 24, 2012 to implement outstanding tax amendments

Bill C-48 Technical Amendments Act, 2012 - re October 24 Notice of Ways and Means Motion and Explanatory Notes

	clears outstanding income tax and sales tax technical amendments from 2009 to 2011
	See November 21, 2012 news release

Final tranche of Pooled Registered Pension Plan regulations pre-published October 26, 2012

Bill C-46 An Act to Amend the Members of Parliament Retiring Allowances Act received Royal Assent November 1, 2012

The information below is only a small part of the Budget. There were no personal income tax changes.

Balanced Budgets

The Government intends to return to a balanced budget in the 2015-2016 budget year.

Elimination of the Penny

Pension Measures included in the 2012 Federal Budget

Old Age Security (OAS) and Guaranteed Income Supplement (GIS)

Age for eligibility to be gradually increased from 65 to 67

	starting April 2023, with full implementation by January 2029
	will not affect anyone who is 54 years or older as of March 31, 2012

Allow Canadians the option of deferring take-up of their OAS benefits for up to 5 years and receiving higher annual benefits, starting on July 1, 2013. The annual OAS would be increased by 7.2% for each full year that it is deferred.

Implement proactive enrolment in a phased-in approach from 2013 to 2015, eliminating the need for many seniors to apply for OAS and GIS.

Canada Pension Plan

A review of the CPP confirmed the financial sustainability of the Plan for at least the next 75 years at the current contribution rate of 9.9% of pensionable earnings. Thus, there will be no change to the contribution rate.

Public Pensions and Pooled Registered Pension Plans

	Ensure that pension plans for public servants and Parliamentarians are sustainable, fair, and financially responsible.
	Support the retirement income system with Pooled Registered Pension Plans (PRPPs)

Other Budget Measures

Employee Taxable Benefit - Group Sickness or Accident Insurance (AD&D) Plan

An employer's contributions to a group sickness (including critical illness ) or accident insurance plan will be included in an employee's income for the year in which the contributions are made, to the extent that the contributions are not in respect of a wage-loss replacement benefit payable on a periodic basis. This will apply to employer contributions made on or after Budget Day to the extent that the contributions relate to coverage after 2012, except that such contributions made in 2012 will be included in the employee's income for 2013.

Canadian Travellers

increase value of goods that may be imported duty- and tax-free by Canadian residents returning from abroad, effective June 1, 2012:

	after a 24-hour absence, from $50 to $200
	after a 48-hour absence, from $400 to $800
	after a 7-day absence, from $750 to $800

eliminate or reduce taxes on foreign-based rental vehicles temporarily imported by Canadian residents

Employment Insurance Program

	limiting EI premium rate increases to 5 cents each year until the EI Operating Account is balanced
	ensure that EI claimants benefit from accepting work
	align the calculation of EI benefit amounts with local labour market conditions

Health-Related Tax Measures Effective March 30, 2012

	exempting pharmacists' professional services from the GST/HST
	expanding the list of health care professionals who can order certain medical and assistive devices zero-rated under the GST/HST
	expanding the list of GST/HST zero-rated medical and assistive devices and the list of expenses an individual may claim for income tax purposes under the Medical Expense Tax Credit (METC) to include blood coagulation monitors for use by individuals who require anti-coagulation therapy

Registered Disability Savings Plans (RDSPs)

A number of changes have been proposed to the rules governing RDSPs. See Registered Disability Savings Plans on the Budget website.

Scientific Research & Experimental Development (SR&ED) Tax Credits

	reduce the general SR&ED investment tax credit rate from 20% to 15%, effective January 1, 2014
	remove capital expenditures from the base of eligible expenditures, effective for expenditures incurred in 2014 and subsequent years
	gradually reduce the "prescribed proxy amount" for computing overhead expenditures, from 65% to 55% of direct labour costs. The 55% rate will be fully phased in as of January 1, 2014.
	allow only 80% of arm's length contract payments to be used for calculating the SR&ED tax credits, effective January 1, 2013
	Canada Revenue Agency (CRA) will conduct a pilot project to determine the feasibility of a formal pre-approval process.
	administrative improvements to the SR&ED tax incentive program

Other Business Tax Measures

doubling of the GST/HST streamlined accounting thresholds

extending the Hiring Credit for Small Business for one year, providing a credit of up to $1,000 against a small employer's increase in its 2012 EI premiums over those paid in 2011. Available to employers whose total EI premiums were at or below $10,000 in 2011.

improvements to the rules for paying eligible dividends

as of April 16, 2012 using My Business Account:

	allowing businesses to submit questions and receive answers to their specific business enquiries electronically
	option to input an address change online
	automatic display of non-capital losses and refundable dividend tax on hand (RDTOH) balances

expansion of web forms for information returns

graduated penalties for late filing of certain information returns, such as T4s, depending on the number of returns

phasing out tax preferences for resource industries

continuing to reduce regulatory burden (red tape) faced by businesses

continuing to explore whether new rules for the taxation of corporate groups could improve the functioning of the corporate tax system

expand the eligibility for accelerated capital cost allowance (CCA) under Class 43.2

tightening the rules applicable to Employees Profit Sharing Plans (EPSPs) to discourage excessive contributions for employees with a close tie to their employer

tightening the rules applicable to Retirement Compensation Arrangements (RCAs) to prevent certain schemes designed to inappropriately reduce tax liabilities

preventing the avoidance of corporate income tax through the use of partnerships to convert income gains into capital gains

Revised: October 26, 2023