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2012 Federal Budget

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Federal Budget -> 2012 Budget

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

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

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

bullet Notice of Ways and Means Motion and Explanatory Notes October 15, 2012
bullet Bill C-45 Jobs and Growth Act October 18, 2012 re October 15 Notice of Ways and Means Motion
bullet Bill C-45 passed by House of Commons December 5, 2012 - off to the Senate for review
bulletBill C-45 Jobs and Growth Act received Royal Assent December 14, 2012
bullet Notice of Ways and Means Motion and Explanatory Notes October 24, 2012 to implement outstanding tax amendments
bullet Bill C-48 Technical Amendments Act, 2012 - re October 24 Notice of Ways and Means Motion and Explanatory Notes
bullet clears outstanding income tax and sales tax technical amendments from 2009 to 2011
bullet See November 21, 2012 news release
bullet Final tranche of Pooled Registered Pension Plan regulations pre-published October 26, 2012
bullet 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)

bullet Age for eligibility to be gradually increased from 65 to 67
bullet starting April 2023, with full implementation by January 2029
bullet will not affect anyone who is 54 years or older as of March 31, 2012
bullet 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.
bullet 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

bullet Ensure that pension plans for public servants and Parliamentarians are sustainable, fair, and financially responsible.
bullet 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

bulletincrease value of goods that may be imported duty- and tax-free by Canadian residents returning from abroad, effective June 1, 2012:
bulletafter a 24-hour absence, from $50 to $200
bulletafter a 48-hour absence, from $400 to $800
bulletafter a 7-day absence, from $750 to $800
bulleteliminate or reduce taxes on foreign-based rental vehicles temporarily imported by Canadian residents

Employment Insurance Program

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

Health-Related Tax Measures Effective March 30, 2012

bulletexempting pharmacists' professional services from the GST/HST
bulletexpanding the list of health care professionals who can order certain medical and assistive devices zero-rated under the GST/HST
bulletexpanding 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

bulletreduce the general SR&ED investment tax credit rate from 20% to 15%, effective January 1, 2014
bulletremove capital expenditures from the base of eligible expenditures, effective for expenditures incurred in 2014 and subsequent years
bulletgradually 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.
bulletallow only 80% of arm's length contract payments to be used for calculating the SR&ED tax credits, effective January 1, 2013
bulletCanada Revenue Agency (CRA) will conduct a pilot project to determine the feasibility of a formal pre-approval process.
bulletadministrative improvements to the SR&ED tax incentive program

Other Business Tax Measures

bulletdoubling of the GST/HST streamlined accounting thresholds
bulletextending 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.
bulletimprovements to the rules for paying eligible dividends
bulletas of April 16, 2012 using My Business Account:
bulletallowing businesses to submit questions and receive answers to their specific business enquiries electronically
bulletoption to input an address change online
bulletautomatic display of non-capital losses and refundable dividend tax on hand (RDTOH) balances
bulletexpansion of web forms for information returns
bulletgraduated penalties for late filing of certain information returns, such as T4s, depending on the number of returns
bulletphasing out tax preferences for resource industries
bulletcontinuing to reduce regulatory burden (red tape) faced by businesses
bulletcontinuing to explore whether new rules for the taxation of corporate groups could improve the functioning of the corporate tax system
bulletexpand the eligibility for accelerated capital cost allowance (CCA) under Class 43.2
bullettightening the rules applicable to Employees Profit Sharing Plans (EPSPs) to discourage excessive contributions for employees with a close tie to their employer
bullettightening the rules applicable to Retirement Compensation Arrangements (RCAs) to prevent certain schemes designed to inappropriately reduce tax liabilities
bulletpreventing the avoidance of corporate income tax through the use of partnerships to convert income gains into capital gains

 

Revised: November 07, 2014

 

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