Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2016

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Part 2 – Tax Expenditure Estimates and Projections

Introduction

Part 2 presents the estimates of the fiscal cost of federal tax expenditures for the years 2010 to 2017. It presents estimates for a wide range of tax expenditures, measures that are not considered tax expenditures (i.e., measures that are considered part of the benchmark tax system) and refundable tax credits that are classified as transfer payments. The estimates are followed by a second table that presents background statistics on total tax revenues by tax base, as well as some other useful statistics, such as the number of filers and tax paid by income tax bracket. Finally, key changes that have been made to tax expenditures since the last edition are described.

Notes:

The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See Part 1 of this report for a discussion of the reasons for this.

The classification of a measure as structural or non-structural is not indicative of the relevance and performance of the measure. A measure could pursue both structural and non-structural objectives, in which case it is categorized based on an assessment of whether the structural or non-structural component predominates (see explanation in the introduction to Part 3 of the report).

Amounts under $500,000 are reported as "S" ("small"), amounts between $500,000 and $5 million are rounded to the nearest $1 million and amounts above $5 million are rounded to the nearest $5 million.

Symbols:

n.a.
No data available to support a meaningful estimate or projection
Tax expenditure not in effect
X
Not published for confidentiality reasons
PIT
Personal income tax
CIT
Corporate income tax
GST
Goods and Services Tax
Tax Expenditures Estimates and Projections
Default ordering Measure Tax 2010 2011 2012 2013 2014 2015 2016 2017 Group Subject Category
1 Deduction for self-employed artists PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Arts and culture Structural
2 Children’s Arts Tax Credit PIT 30 35 40 40 45 45 45 Tax expenditures Arts and culture Non-structural
3 Cash basis accounting PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
4 Cash basis accounting CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
5 Deferral of income from destruction of livestock PIT -1 S S S S n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
6 Deferral of income from destruction of livestock CIT S S S S S n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
7 Deferral of income from sale of livestock in a region of drought, flood or excessive moisture PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
8 Deferral of income from sale of livestock in a region of drought, flood or excessive moisture CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
9 Flexibility in inventory accounting PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
10 Flexibility in inventory accounting CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
11 Deferral of capital gains through intergenerational rollovers of family farms or fishing businesses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
12 Deferral of income from grain sold through cash purchase tickets PIT -10 70 30 -15 -40 5 n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
13 Deferral of income from grain sold through cash purchase tickets CIT -10 40 15 -5 -20 4 n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
14 Exemption for insurers of farming and fishing property CIT 5 5 10 10 10 10 10 10 Tax expenditures Business – farming and fishing Non-structural
15 Patronage dividends paid as shares by agricultural cooperatives PIT 2 2 2 2 1 2 2 2 Tax expenditures Business – farming and fishing Non-structural
16 Patronage dividends paid as shares by agricultural cooperatives CIT 4 5 4 4 3 4 4 4 Tax expenditures Business – farming and fishing Non-structural
17 Tax treatment of farm savings accounts (AgriInvest and Agri-Québec) PIT 20 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
18 Tax treatment of farm savings accounts (AgriInvest and Agri-Québec) CIT 3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
19 Zero-rating of agricultural and fish products and purchases GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
20 Accelerated capital cost allowance for mining and oil sands assets PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
21 Accelerated capital cost allowance for mining and oil sands assets CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
22 Accelerated deductibility of some Canadian Exploration Expenses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
23 Accelerated deductibility of some Canadian Exploration Expenses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
24 Corporate Mineral Exploration and Development Tax Credit CIT 15 75 60 15 25 25 25 25 Tax expenditures Business – natural resources Non-structural
25 Earned depletion PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
26 Earned depletion CIT 1 S S S 3 S S S Tax expenditures Business – natural resources Non-structural
27 Flow-through share deductions PIT 285 345 200 110 115 100 100 100 Tax expenditures Business – natural resources Non-structural
28 Flow-through share deductions CIT 70 85 55 35 30 25 25 25 Tax expenditures Business – natural resources Non-structural
29 Mineral Exploration Tax Credit for flow-through share investors PIT 110 100 45 20 30 30 -10 Tax expenditures Business – natural resources Non-structural
30 Reclassification of expenses under flow-through shares PIT -2 -5 -10 -10 -5 -10 -5 -5 Tax expenditures Business – natural resources Non-structural
31 Reclassification of expenses under flow-through shares CIT -1 -2 -2 -1 -1 -1 -1 -1 Tax expenditures Business – natural resources Non-structural
32 Expensing of current expenditures on scientific research and experimental development PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
33 Expensing of current expenditures on scientific research and experimental development CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
34 Expensing of purchases of capital equipment used for scientific research and experimental development PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
35 Expensing of purchases of capital equipment used for scientific research and experimental development CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
36 Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion for CIT) PIT 3 4 4 3 S 3 3 3 Tax expenditures Business – research and development Non-structural
37 Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion for CIT) CIT 1,565 1,605 1,815 1,895 1,510 1,525 1,585 1,665 Tax expenditures Business – research and development Non-structural
38 Small suppliers’ threshold GST 200 205 210 215 220 225 235 245 Tax expenditures Business – small businesses Structural
39 Deduction of allowable business investment losses PIT 35 30 35 25 30 30 30 30 Tax expenditures Business – small businesses Non-structural
40 Deduction of allowable business investment losses CIT 15 10 10 10 10 10 10 10 Tax expenditures Business – small businesses Non-structural
41 Non-taxation of provincial assistance for venture investments in small businesses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – small businesses Non-structural
42 Non-taxation of provincial assistance for venture investments in small businesses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – small businesses Non-structural
43 Preferential tax rate for small businesses CIT 4,225 3,870 3,260 3,065 3,225 3,095 3,615 4,120 Tax expenditures Business – small businesses Non-structural
44 Rollovers of investments in small businesses PIT 3 4 X 5 5 5 10 10 Tax expenditures Business – small businesses Non-structural
45 Deductibility of costs of capital assets and eligibility for investment tax credits before asset is put in use PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
46 Deductibility of costs of capital assets and eligibility for investment tax credits before asset is put in use CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
47 Deductibility of earthquake reserves CIT 1 1 1 S S 1 1 1 Tax expenditures Business – other Structural
48 Deferral through five-year capital gain reserve PIT 5 5 10 10 10 10 10 10 Tax expenditures Business – other Structural
49 Deferral through five-year capital gain reserve CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
50 Deferral through rollover of capital gains and capital cost allowance recapture in respect of involuntary dispositions PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
51 Deferral through rollover of capital gains and capital cost allowance recapture in respect of involuntary dispositions CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
52 Deferral through use of billed-basis accounting by professionals and professional corporations PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
53 Deferral through use of billed-basis accounting by professionals and professional corporations CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
54 Exemption for domestic financial services GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
55 Exemption from branch tax for transportation, communications, and iron ore mining corporations CIT 45 40 10 20 4 25 25 25 Tax expenditures Business – other Structural
56 Expensing of advertising costs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
57 Expensing of advertising costs CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
58 Holdback on progress payments to contractors PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
59 Holdback on progress payments to contractors CIT 30 45 45 60 85 85 85 90 Tax expenditures Business – other Structural
60 Tax status of certain federal Crown corporations CIT X X X X X X X X Tax expenditures Business – other Structural
61 Accelerated capital cost allowance for computer equipment PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
62 Accelerated capital cost allowance for computer equipment CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
63 Accelerated capital cost allowance for liquefied natural gas facilities PIT n.a. n.a. n.a. Tax expenditures Business – other Non-structural
64 Accelerated capital cost allowance for liquefied natural gas facilities CIT n.a. n.a. n.a. Tax expenditures Business – other Non-structural
65 Accelerated capital cost allowance for manufacturing or processing machinery and equipment PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
66 Accelerated capital cost allowance for manufacturing or processing machinery and equipment CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
67 Accelerated capital cost allowance for vessels PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
68 Accelerated capital cost allowance for vessels CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
69 Atlantic Investment Tax Credit (non-refundable portion for CIT) PIT 5 10 10 5 10 10 10 10 Tax expenditures Business – other Non-structural
70 Atlantic Investment Tax Credit (non-refundable portion for CIT) CIT 140 120 305 355 225 180 160 165 Tax expenditures Business – other Non-structural
71 Deferral for asset transfers to a corporation and corporate reorganizations PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
72 Deferral for asset transfers to a corporation and corporate reorganizations CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
73 Deferral through 10-year capital gain reserve PIT 25 15 30 25 25 25 25 25 Tax expenditures Business – other Non-structural
74 Deferral through rollover of capital gains and capital cost allowance recapture in respect of dispositions of land and buildings PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
75 Deferral through rollover of capital gains and capital cost allowance recapture in respect of dispositions of land and buildings CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
76 Exemption from tax for international banking centres CIT X X X X Tax expenditures Business – other Non-structural
77 Expensing of employee training costs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
78 Expensing of employee training costs CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
79 Foreign Convention and Tour Incentive Program GST 10 15 15 10 10 15 15 15 Tax expenditures Business – other Non-structural
80 Lifetime Capital Gains Exemption PIT 865 990 1,090 1,100 1,300 1,265 1,430 1,535 Tax expenditures Business – other Non-structural
81 Non-deductibility of advertising expenses in foreign media PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
82 Non-deductibility of advertising expenses in foreign media CIT -1 -1 -1 S S S S S Tax expenditures Business – other Non-structural
83 Special tax rate for credit unions CIT 80 55 40 25 20 20 10 S Tax expenditures Business – other Non-structural
84 Additional deduction for gifts of medicine CIT S S S S S S S S Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
85 Charitable Donation Tax Credit PIT 2,345 2,365 2,350 2,530 2,605 2,675 2,880 2,905 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
86 Deductibility of charitable donations CIT 405 405 420 310 510 435 475 485 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
87 Deduction for certain contributions by individuals who have taken vows of perpetual poverty PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
88 Exemption for certain supplies made by charities and non-profit organizations GST 865 955 865 890 945 1,005 1,065 1,130 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
89 First-Time Donor’s Super Credit PIT 5 5 5 5 5 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
90 Non-taxation of capital gains on donations of cultural property PIT 5 10 10 25 10 10 10 10 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
91 Non-taxation of capital gains on donations of cultural property CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
92 Non-taxation of capital gains on donations of ecologically sensitive land PIT 2 2 2 2 2 1 2 2 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
93 Non-taxation of capital gains on donations of ecologically sensitive land CIT 1 1 1 S 3 1 2 2 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
94 Non-taxation of capital gains on donations of publicly listed securities PIT 40 45 40 45 70 45 50 50 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
95 Non-taxation of capital gains on donations of publicly listed securities CIT 60 65 55 70 100 80 85 85 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
96 Non-taxation of non-profit organizations PIT/CIT 125 125 70 90 90 65 90 130 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
97 Non-taxation of registered charities PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
98 Non-taxation of registered charities CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
99 Rebate for poppies and wreaths GST X X X X X X X X Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
100 Rebate for qualifying non-profit organizations GST 75 70 65 65 65 65 70 75 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
101 Rebate for registered charities GST 270 285 290 285 295 300 315 330 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
102 Deduction for tuition assistance for adult basic education PIT 3 3 3 3 3 2 2 2 Tax expenditures Education Structural
103 Education Tax Credit PIT 630 655 685 705 725 750 770 795 Tax expenditures Education Structural
104 Textbook Tax Credit PIT 100 105 110 115 115 120 125 130 Tax expenditures Education Structural
105 Tuition Tax Credit PIT 850 935 995 1,040 1,105 1,135 1,165 1,195 Tax expenditures Education Structural
106 Exemption for tuition and educational services GST 615 665 725 780 815 850 885 915 Tax expenditures Education Non-structural
107 Exemption of scholarship, fellowship and bursary income PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Education Non-structural
108 Rebate for book purchases made by certain organizations GST 20 20 20 20 20 20 20 20 Tax expenditures Education Non-structural
109 Rebate for schools, colleges and universities GST 720 735 700 695 715 735 745 760 Tax expenditures Education Non-structural
110 Registered Education Savings Plans PIT 160 170 160 170 160 130 125 140 Tax expenditures Education Non-structural
111 Student Loan Interest Credit PIT 40 40 45 45 40 45 45 45 Tax expenditures Education Non-structural
112 Apprentice vehicle mechanics’ tools deduction PIT 4 4 4 4 4 4 4 5 Tax expenditures Employment Structural
113 Canada Employment Credit PIT 1,935 1,995 2,040 2,110 2,190 2,280 2,335 2,400 Tax expenditures Employment Structural
114 Child care expense deduction PIT 850 900 960 960 985 1,070 1,080 1,120 Tax expenditures Employment Structural
115 Deductibility of certain costs incurred by musicians PIT 1 1 1 1 1 1 1 1 Tax expenditures Employment Structural
116 Deductibility of expenses by employed artists PIT S S S S S S S S Tax expenditures Employment Structural
117 Deduction for tradespeople’s tool expenses PIT 3 3 2 2 2 2 2 2 Tax expenditures Employment Structural
118 Deduction of other employment expenses PIT 945 985 1,000 980 960 995 1,030 1,095 Tax expenditures Employment Structural
119 Deduction of union and professional dues PIT 785 825 860 890 905 950 965 1,020 Tax expenditures Employment Structural
120 Moving expense deduction PIT 100 100 100 95 100 105 105 115 Tax expenditures Employment Structural
121 Non-taxation of allowances for diplomats and other government employees posted abroad PIT 40 45 25 25 25 20 n.a. n.a. Tax expenditures Employment Structural
122 Non-taxation of benefits in respect of home relocation loans PIT S S S S S S S S Tax expenditures Employment Structural
123 Non-taxation of certain non-monetary employment benefits PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Employment Structural
124 Rebate to employees and partners GST 75 70 65 65 65 70 70 75 Tax expenditures Employment Structural
125 Apprenticeship Job Creation Tax Credit PIT 2 2 2 2 2 2 2 2 Tax expenditures Employment Non-structural
126 Apprenticeship Job Creation Tax Credit CIT 65 70 85 95 105 105 110 115 Tax expenditures Employment Non-structural
127 Deferral of salary through leave of absence or sabbatical plan PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Employment Non-structural
128 Employee benefit plans PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Employment Non-structural
129 Employee stock option deduction PIT 690 740 590 630 760 695 800 840 Tax expenditures Employment Non-structural
130 Non-taxation of income earned by military and police deployed to high- and moderate-risk international missions PIT 35 35 15 15 4 5 n.a. n.a. Tax expenditures Employment Non-structural
131 Northern Residents Deductions PIT 160 170 180 175 175 185 185 195 Tax expenditures Employment Non-structural
132 Overseas Employment Tax Credit PIT 75 75 70 55 40 20 Tax expenditures Employment Non-structural
133 Deductibility of contributions to a qualifying environmental trust PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Structural
134 Deductibility of contributions to a qualifying environmental trust CIT S 5 -2 S -3 55 55 55 Tax expenditures Environment Structural
135 Accelerated capital cost allowance for clean energy generation equipment PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
136 Accelerated capital cost allowance for clean energy generation equipment CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
137 Accelerated deductibility of Canadian Renewable and Conservation Expenses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
138 Accelerated deductibility of Canadian Renewable and Conservation Expenses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
139 Public Transit Tax Credit PIT 150 160 170 180 190 200 205 210 Tax expenditures Environment Non-structural
140 Adoption Expense Tax Credit PIT 3 3 3 2 2 2 2 2 Tax expenditures Families and households Structural
141 Caregiver Credit PIT 100 110 120 125 130 135 140 145 Tax expenditures Families and households Structural
142 Child Tax Credit PIT 1,480 1,510 1,560 1,590 1,615 Tax expenditures Families and households Structural
143 Eligible Dependant Credit PIT 770 770 775 770 790 895 920 950 Tax expenditures Families and households Structural
144 Family Caregiver Tax Credit PIT 55 65 65 70 75 75 Tax expenditures Families and households Structural
145 Goods and Services Tax/Harmonized Sales Tax Credit GST 3,760 3,870 3,995 4,090 4,175 4,265 4,360 4,455 Tax expenditures Families and households Structural
146 Infirm Dependant Credit PIT 5 5 5 5 5 5 10 10 Tax expenditures Families and households Structural
147 Spouse or Common-Law Partner Credit PIT 1,410 1,425 1,495 1,530 1,570 1,640 1,680 1,730 Tax expenditures Families and households Structural
148 Deferral of capital gains through transfers to a spouse, spousal trust or alter ego trust PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Families and households Non-structural
149 Exemption for child care GST 120 120 130 135 140 150 155 160 Tax expenditures Families and households Non-structural
150 Exemption for personal care services GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Families and households Non-structural
151 Family Tax Cut PIT 1,900 1,930 1,905 1,970 Tax expenditures Families and households Non-structural
152 Inclusion of the Universal Child Care Benefit in the income of an eligible dependant PIT 2 2 2 2 2 5 5 5 Tax expenditures Families and households Non-structural
153 Investment Tax Credit for Child Care Spaces PIT S S S S S S S S Tax expenditures Families and households Non-structural
154 Investment Tax Credit for Child Care Spaces CIT S S S S S S S S Tax expenditures Families and households Non-structural
155 Non-taxation of up to $10,000 of death benefits PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Families and households Non-structural
156 Tax treatment of alimony and maintenance payments PIT 60 60 60 65 70 70 75 75 Tax expenditures Families and households Non-structural
157 Zero-rating of feminine hygiene products GST 15 35 35 Tax expenditures Families and households Non-structural
158 Disability supports deduction PIT 1 2 2 1 1 1 1 1 Tax expenditures Health Structural
159 Disability Tax Credit PIT 650 675 720 770 825 860 895 930 Tax expenditures Health Structural
160 Medical Expense Tax Credit PIT 1,080 1,135 1,260 1,310 1,370 1,450 1,535 1,630 Tax expenditures Health Structural
161 Children’s Fitness Tax Credit (before 2015) PIT 110 110 115 120 180 Tax expenditures Health Non-structural
162 Exemption for health care services GST 585 585 610 640 680 720 750 775 Tax expenditures Health Non-structural
163 Exemption for hospital parking GST 35 40 40 40 Tax expenditures Health Non-structural
164 Home Accessibility Tax Credit PIT 40 40 Tax expenditures Health Non-structural
165 Non-taxation of benefits from private health and dental plans PIT 2,225 2,315 2,420 2,520 2,590 2,730 2,735 2,890 Tax expenditures Health Non-structural
166 Rebate for hospitals, facility operators and external suppliers GST 560 620 590 630 650 665 675 685 Tax expenditures Health Non-structural
167 Rebate for specially equipped motor vehicles GST S S S S S S S S Tax expenditures Health Non-structural
168 Registered Disability Savings Plans PIT 10 15 25 25 35 40 45 55 Tax expenditures Health Non-structural
169 Surtax on the profits of tobacco manufacturers CIT X X X X X X X X Tax expenditures Health Non-structural
170 Zero-rating of medical and assistive devices GST 310 320 325 335 350 360 370 380 Tax expenditures Health Non-structural
171 Zero-rating of prescription drugs GST 695 720 730 750 785 795 830 865 Tax expenditures Health Non-structural
172 Exemption for sales of used residential housing and other personal-use real property GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Housing Structural
173 Exemption for certain residential rent GST 1,520 1,455 1,485 1,515 1,585 1,685 1,765 1,850 Tax expenditures Housing Non-structural
174 Exemption for short-term accommodation GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Housing Non-structural
175 First-Time Home Buyers’ Tax Credit PIT 105 110 110 105 115 120 120 120 Tax expenditures Housing Non-structural
176 Non-taxation of capital gains on principal residences PIT 4,105 4,700 3,900 4,160 5,100 5,920 5,320 4,975 Tax expenditures Housing Non-structural
177 Rebate for new housing GST 585 575 580 600 575 555 535 545 Tax expenditures Housing Non-structural
178 Rebate for new residential rental property GST 65 65 85 105 105 100 95 100 Tax expenditures Housing Non-structural
179 Non-taxation of certain veterans’ benefits PIT 275 270 265 255 240 230 220 215 Tax expenditures Income support Non-structural
180 Non-taxation of Guaranteed Income Supplement and Allowance benefits PIT 100 115 130 135 135 140 145 150 Tax expenditures Income support Non-structural
181 Non-taxation of investment income on certain amounts received as damages in respect of personal injury or death PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Income support Non-structural
182 Non-taxation of RCMP pensions and other compensation in respect of injury, disability or death PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Income support Non-structural
183 Non-taxation of social assistance benefits PIT 155 160 170 175 180 190 200 210 Tax expenditures Income support Non-structural
184 Non-taxation of workers’ compensation benefits PIT 625 625 625 610 610 620 625 635 Tax expenditures Income support Non-structural
185 Income tax exemption for certain public bodies CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Intergovernmental tax arrangements Structural
186 Rebate for municipalities GST 1,975 2,070 2,010 1,990 2,035 2,030 2,010 2,040 Tax expenditures Intergovernmental tax arrangements Structural
187 Refunds for aboriginal self-governments GST 5 5 5 5 5 5 5 5 Tax expenditures Intergovernmental tax arrangements Structural
188 Logging Tax Credit PIT S 1 1 1 1 1 1 1 Tax expenditures Intergovernmental tax arrangements Non-structural
189 Logging Tax Credit CIT 10 10 10 20 25 25 25 30 Tax expenditures Intergovernmental tax arrangements Non-structural
190 Deductibility of countervailing and anti-dumping duties when paid PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
191 Deductibility of countervailing and anti-dumping duties when paid CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
192 Exemption for international shipping and aviation by non-residents PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
193 Exemption for international shipping and aviation by non-residents CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
194 Non-taxation of certain importations GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
195 Non-taxation of life insurance companies’ foreign income CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
196 Travellers’ exemption GST 170 195 210 235 265 265 275 285 Tax expenditures International Structural
197 Exemptions from non-resident withholding tax PIT/CIT 3,680 4,075 4,475 5,500 5,290 5,335 5,555 5,815 Tax expenditures International Non-structural
198 Tax treatment of active business income of foreign affiliates of Canadian corporations and deductibility of expenses incurred to invest in foreign affiliates CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Non-structural
199 Deferred Profit-Sharing Plans PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
200 Partial inclusion of U.S. Social Security benefits PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
201 Pension Income Credit PIT 1,010 1,035 1,065 1,100 1,135 1,165 1,205 1,250 Tax expenditures Retirement Non-structural
202 Pension income splitting PIT 895 975 1,040 1,075 1,110 1,180 1,205 1,285 Tax expenditures Retirement Non-structural
203 Pooled Registered Pension Plans PIT n.a. n.a. n.a. Tax expenditures Retirement Non-structural
204 Registered Pension Plans PIT 15,985 16,085 19,680 21,520 23,415 23,820 25,745 27,455 Tax expenditures Retirement Non-structural
205 Registered Retirement Savings Plans PIT 9,995 9,955 12,740 13,900 14,700 14,670 15,475 16,260 Tax expenditures Retirement Non-structural
206 Saskatchewan Pension Plan PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
207 $200 capital gains exemption on foreign exchange transactions PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
208 Capital gains exemption on personal-use property PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
209 Capital gains exemption on personal-use property CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
210 Tax treatment of investment income from life insurance policies PIT 260 285 275 270 280 275 265 280 Tax expenditures Savings and investment Structural
211 Taxation of capital gains upon realization PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
212 Taxation of capital gains upon realization CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
213 Labour-Sponsored Venture Capital Corporations Credit PIT 130 140 150 145 125 95 50 Tax expenditures Savings and investment Non-structural
214 Non-taxation of capital dividends PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Non-structural
215 Non-taxation of capital dividends CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Non-structural
216 Partial inclusion of capital gains PIT 3,630 3,800 3,330 4,135 5,650 5,250 5,830 6,330 Tax expenditures Savings and investment Non-structural
217 Partial inclusion of capital gains CIT 3,330 3,865 3,880 4,505 5,460 5,715 6,280 6,675 Tax expenditures Savings and investment Non-structural
218 Tax-Free Savings Account PIT 165 160 300 430 485 555 750 855 Tax expenditures Savings and investment Non-structural
219 Age Credit PIT 2,410 2,530 2,700 2,885 3,010 3,160 3,310 3,475 Tax expenditures Social Non-structural
220 Deduction for clergy residence PIT 85 85 90 85 85 85 85 85 Tax expenditures Social Non-structural
221 Exemption and rebate for legal aid services GST 30 30 30 30 35 35 35 40 Tax expenditures Social Non-structural
222 Exemption for ferry, road and bridge tolls GST 15 15 10 10 10 15 15 15 Tax expenditures Social Non-structural
223 Exemption for municipal transit GST 170 175 180 185 195 205 215 220 Tax expenditures Social Non-structural
224 Exemption for water, sewage and basic garbage collection services GST 190 200 205 220 230 245 250 260 Tax expenditures Social Non-structural
225 Political Contribution Tax Credit PIT 20 25 25 25 25 35 25 30 Tax expenditures Social Non-structural
226 Search and Rescue Volunteers Tax Credit PIT 2 2 2 2 Tax expenditures Social Non-structural
227 Tax-free amount for emergency service volunteers PIT n.a. 3 4 4 3 3 3 3 Tax expenditures Social Non-structural
228 Volunteer Firefighters Tax Credit PIT 15 15 15 15 15 15 15 Tax expenditures Social Non-structural
229 Zero-rating of basic groceries GST 3,570 3,640 3,730 3,840 4,020 4,075 4,255 4,420 Tax expenditures Social Non-structural
230 Non-taxation of income from the Office of the Governor General of Canada PIT S S S Tax expenditures Other Structural
231 Non-taxation of personal property of status Indians and Indian bands situated on reserve PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Other Non-structural
232 Non-taxation of personal property of status Indians and Indian bands situated on reserve GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Other Non-structural
233 Deduction for intangible assets (eligible capital expenditures) PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Business – other Structural
234 Deduction for intangible assets (eligible capital expenditures) CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Business – other Structural
235 Deduction of carrying charges incurred to earn income PIT 1,005 1,085 1,080 1,180 1,265 1,310 1,430 1,535 Tax measures other than tax expenditures Business – other Structural
236 Deduction of carrying charges incurred to earn income CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Business – other Structural
237 Non-capital loss carry-overs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Business – other Structural
238 Non-capital loss carry-overs CIT 6,775 6,280 6,295 7,140 6,935 8,625 8,380 8,640 Tax measures other than tax expenditures Business – other Structural
239 Partial deduction of and partial input tax credits for meals and entertainment PIT 185 185 200 200 200 205 205 205 Tax measures other than tax expenditures Business – other Structural
240 Partial deduction of and partial input tax credits for meals and entertainment CIT 270 280 275 265 295 280 300 300 Tax measures other than tax expenditures Business – other Structural
241 Partial deduction of and partial input tax credits for meals and entertainment GST 145 150 155 160 155 155 160 170 Tax measures other than tax expenditures Business – other Structural
242 Patronage dividend deduction CIT 280 335 240 220 230 220 235 240 Tax measures other than tax expenditures Business – other Structural
243 Non-taxation of strike pay PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Employment Structural
244 Tax treatment of Canada Pension Plan and Quebec Pension Plan contributions and benefits PIT 7,530 8,015 8,630 8,875 9,205 9,595 9,850 10,315 Tax measures other than tax expenditures Employment Structural
245 Tax treatment of Employment Insurance and Quebec Parental Insurance Plan premiums and benefits PIT 2,900 3,140 3,410 3,640 3,755 3,895 3,960 3,355 Tax measures other than tax expenditures Employment Structural
246 Non-taxation of lottery and gambling winnings PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
247 Quebec Abatement PIT 3,665 3,885 4,040 4,130 4,390 4,630 4,900 5,175 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
248 Transfer of income tax points to provinces PIT 17,385 18,340 19,115 20,155 21,415 22,600 23,900 25,245 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
249 Transfer of income tax points to provinces CIT 2,050 2,440 2,515 2,655 2,905 2,875 3,035 3,085 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
250 Foreign tax credit for individuals PIT 670 740 860 970 980 995 1,005 1,020 Tax measures other than tax expenditures International Structural
251 Capital loss carry-overs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Savings and investment Structural
252 Capital loss carry-overs CIT 730 550 540 565 835 870 895 930 Tax measures other than tax expenditures Savings and investment Structural
253 Dividend gross-up and tax credit PIT 3,780 4,145 4,415 5,025 4,560 4,840 4,595 4,640 Tax measures other than tax expenditures Savings and investment Structural
254 Investment corporation deduction CIT S S S S S S S S Tax measures other than tax expenditures Savings and investment Structural
255 Refundable capital gains tax for investment and mutual fund corporations CIT 195 205 110 225 515 295 305 320 Tax measures other than tax expenditures Savings and investment Structural
256 Credit for the Basic Personal Amount PIT 28,350 29,020 30,405 31,520 32,420 33,825 34,790 35,930 Tax measures other than tax expenditures Other Structural
257 Non-taxation of veterans’ Disability Awards and Critical Injury Benefits PIT 95 95 105 115 115 160 175 150 Tax measures other than tax expenditures Other Structural
258 Refundable taxes on investment income of private corporations CIT 785 235 45 -15 -740 -725 -285 125 Tax measures other than tax expenditures Other Structural
259 Special tax computation for certain retroactive lump-sum payments PIT S S S 4 S S S S Tax measures other than tax expenditures Other Structural
260 Atlantic Investment Tax Credit (refundable portion) CIT 15 15 15 15 20 15 20 20 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
261 Canada Child Tax Benefit PIT 10,015 10,050 10,265 10,400 10,370 10,540 10,675 10,815 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
262 Canadian Film or Video Production Tax Credit CIT 200 225 260 250 255 270 280 290 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
263 Children’s Fitness Tax Credit (after 2014) PIT 195 195 200 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
264 Film or Video Production Services Tax Credit CIT 80 90 90 90 135 110 115 120 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
265 Refundable Medical Expense Supplement PIT 135 135 140 140 140 145 145 150 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
266 Scientific Research and Experimental Development Investment Tax Credit (refundable portion) CIT 1,500 1,500 1,455 1,330 1,500 1,515 1,575 1,645 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit
267 Working Income Tax Benefit PIT 1,055 1,080 1,100 1,180 1,165 1,150 1,150 1,150 Refundable tax credits classified as transfer payments Not applicable Refundable tax credit

 

Background Statistics

Table
Federal Revenues, Fiscal Year 2014–15
  Revenues
(billions of dollars)
Share of total revenues
(%)
Share of gross domestic product
(%)
Personal income taxes 135.7 48.1 6.9
Corporate income taxes 39.4 14.0 2.0
Non-resident withholding taxes 6.2 2.2 0.3
Goods and Services Tax 31.3 11.1 1.6
Other excise duties and taxes 15.9 5.6 0.8
 
Total tax revenues 228.6 81.0 11.6
Non-tax revenues 53.8 19.1 2.7
 
Total revenues 282.3 100.0 14.3
Note: Non-tax revenues include revenues from consolidated Crown corporations, net income from enterprise Crown corporations, returns on investments, foreign exchange revenues and proceeds from the sales of goods and services. Totals may not add due to rounding.
Source: Department of Finance Canada, Update of Economic and Fiscal Projections 2015.
Table
Federal Personal Income Tax Brackets and Rates, Tax Filers and Taxes Paid, 2013
  Tax Brackets Tax Filers Taxes Paid
 


  Income range Rate Number
(millions)
Share
(%)
Amount
(billions of dollars)
Share
(%)
  First bracket Under $43,561 15% 8.6 31 14.8 11
  Second bracket $43,561 - $87,123 22% 6.6 24 45.4 36
  Third bracket $87,123 - $135,054 26% 1.6 6 24.6 19
  Fourth bracket Over $135,054 29% 0.7 3 42.4 33
Taxable filers     17.6 63 127.0 100
Non-taxable filers     10.3 37    
All tax filers     27.9 100    
Note: These statistics are presented on a public accounts basis and calculated using the T1 micro-simulation model, which relies on individual tax returns for the 2013 taxation year provided by the Canada Revenue Agency. Taxes paid reflect the total amount of net federal tax reported on line 420 of the Income Tax and Benefit Return. Totals may not add due to rounding.
Source: T1 Income Tax and Benefit Return sample data.
Table
Federal Corporate Taxable Income, Number of Corporations and Taxes Paid
(Corporations With Positive Taxable Income), 2013
  Taxable Income Corporations Reporting Income Taxes Paid
 


  Amount
(billions of dollars)
Share
(%)
Number
(thousands)
Share
(%)
Amount
(billions of dollars)
Share
(%)
Canadian-controlled private corporations 140.0 51 824.4 98 17.4 47
  Business income taxed at the preferential tax rate for small business 72.5 26 685.7 81    
  Other business income taxed at the general rate 49.9 18 78.1 9    
  Other income 17.5 6 250.8 30    
Other corporations 137.2 49 17.4 2 19.8 53
  Business income taxed at the general rate 136.2 49 16.9 2    
  Other Income 1.0 0 8.7 1    
Total 277.2 100 841.8 100 37.1 100
Note: The sum of the number of corporations reporting each type of income does not add up to the total number of corporations, as a corporation may report income of more than one type. Totals may not add due to rounding.
Source: T2 Corporation Income Tax Return (Corporation Tax Processing System) data.

Changes to Tax Expenditures Since the 2014 Edition

New tax measures were introduced and others modified since the last edition of this report. In addition to tax measures for which legislation is already in force, this report also considers announced measures that have a coming-into-force date in the 2016 taxation year or earlier, even if the enacting legislation of the measure has not received Royal Assent by the time of production of this report. Changes affecting estimates and projections of tax expenditures are described below.

Personal Income Tax

Changes to Tax Rates and Tax Brackets

On December 7, 2015, the Government proposed to reduce the 22% personal income tax rate to 20.5%, and to create a new top tax rate of 33% for taxable income above $200,000, effective for 2016.[1] These new rates are reflected in the benchmark tax rate structure for 2016 and subsequent years, consequently affecting the estimated value of many personal income tax expenditures for those years.

Charitable Donation Tax Credit

On December 7, 2015, the Government proposed to amend the Charitable Donation Tax Credit to allow donors with taxable income greater than $200,000 to claim a 33% tax credit on any donations greater than $200 that are made from income that is subject to the 33% marginal tax rate. Donations that exceed the amount of a donor's taxable income above $200,000 will be subject to the 29% credit rate. This change will be effective for the 2016 and subsequent taxation years.[2]

The Charitable Donation Tax Credit is a non-refundable tax credit on donations to registered charities, registered Canadian amateur athletic associations and other qualified donees. The value of the credit is calculated by applying the lowest personal income tax rate (15% in 2015) to the first $200 of total donations in a year and the highest personal income tax rate (29% in 2015) to donations in excess of $200. The credit is available for donations up to 75% of an individual's net income and any unused donations can be carried forward for up to five years.

Home Accessibility Tax Credit

To help seniors and persons with disabilities with the costs of ensuring their homes remain safe, secure and accessible, Budget 2015 introduced a new, permanent Home Accessibility Tax Credit. This credit will allow eligible individuals to claim up to $10,000 of eligible home renovation expenditures per year, providing up to $1,500 in tax relief. Eligible expenditures are for improvements that allow a senior or a person who is eligible for the Disability Tax Credit to be more mobile, safe and functional within their home. Examples of eligible expenditures include costs associated with the purchase and installation of wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars. This measure applies in respect of eligible expenditures for work performed and paid for and/or goods acquired on or after January 1, 2016.

Lifetime Capital Gains Exemption for Qualified Farm or Fishing Property

The Lifetime Capital Gains Exemption (LCGE) for farm or fishing property provides an incentive to invest in the development of productive farm and fishing businesses, and helps farm and fishing business owners to accumulate capital for retirement. Budget 2015 increased the LCGE applicable to capital gains realized on the disposition of qualified farm or fishing property to $1 million. This measure applies to dispositions of qualified farm or fishing property that occur on or after April 21, 2015. For taxation years after 2015, the LCGE for qualified farm or fishing property will be maintained at $1 million until the indexed LCGE applicable to capital gains realized on the disposition of qualified small business shares ($824,176 in 2016) exceeds $1 million. At that time, the same LCGE limit, indexed to inflation, will once again apply to the three types of property.

Registered Disability Savings Plans— Legal Representation

Budget 2015 extended, until the end of 2018, the temporary federal measure that allows a qualifying family member to become the plan holder of a Registered Disability Savings Plan (RDSP) for an adult individual who might not be able to enter into a contract.

The RDSP is a tax-assisted savings vehicle introduced in Budget 2007 to help to ensure the long-term financial security of Canadians with severe disabilities. Since becoming available in 2008, some adults with disabilities have experienced difficulties in establishing an RDSP because their capacity to enter into a contract is in doubt. In some provinces and territories, the only way an RDSP can be opened in such cases is for the individual to be declared legally incompetent and to have someone named as their legal guardian—a potentially lengthy and expensive process that could have significant repercussions for the individual.

To address this issue, Budget 2012 allowed—on a temporary basis until the end of 2016—a qualifying family member (i.e., a beneficiary's parent, spouse or common-law partner) to become the plan holder of the RDSP for an adult individual who may lack the capacity to enter into a contract. In recognition of the need for time to develop a solution that is suitable for a jurisdiction's needs, Budget 2015 extended the temporary measure introduced in Budget 2012 by two years, to apply to the end of 2018.

Minimum Withdrawal Factors for Registered Retirement Income Funds

Budget 2015 adjusted the Registered Retirement Income Fund (RRIF) minimum withdrawal factors that apply in respect of ages 71 to 94, on the basis of a 5% nominal rate of return and 2% indexing. These assumptions are more consistent with long-term historical real rates of return on a portfolio of investments and expected inflation. The new, lower RRIF factors will permit holders to preserve more of their RRIF savings in order to provide income at older ages, while continuing to ensure that the tax deferral provided on Registered Retirement Savings Plan/RRIF savings serves a retirement income purpose.

Tax-Free Savings Account

On December 7, 2015, the Government proposed to reduce the Tax-Free Savings Account (TFSA) annual contribution limit to $5,500 and reinstate indexation effective for 2016.[3] The TFSA is a flexible, registered general-purpose savings vehicle that allows Canadian residents aged 18 or older to earn tax-free investment income. The TFSA was introduced in 2009 with an annual contribution limit of $5,000, indexed to inflation in $500 increments. Due to indexation, on January 1, 2013, the TFSA annual contribution limit increased to $5,500. Budget 2015 increased the TFSA annual contribution limit to $10,000, with the limit no longer indexed to inflation, effective for 2015 and subsequent years.

Mineral Exploration Tax Credit for Flow-Through Share Investors

The Mineral Exploration Tax Credit is a reduction in tax, available to individuals who invest in flow-through shares, equal to 15% of specified mineral exploration expenses incurred in Canada and transferred to flow-through share investors. The credit was introduced on a temporary basis in 2000 and has generally been extended on an annual basis since then. On March 1, 2015, the Government announced that it would extend eligibility for the credit for an additional year to flow-through share agreements entered into on or before March 31, 2016. Under the one-year "look-back" rule, funds raised with the benefit of the credit in 2016, for example, can be spent on eligible exploration up to the end of 2017.

Non-Taxation of Veterans' Benefits

In March 2015, two new tax-free benefits for Canada's veterans and their families were announced:

  • The Family Caregiver Relief Benefit provides eligible veterans with an annual tax-free grant of $7,238. This benefit provides informal caregivers relief while ensuring veterans continue to get the support they need. The tax expenditure associated with the non-taxation of this benefit is included in the measure "Non-taxation of certain veterans' benefits".
  • The Critical Injury Benefit provides a $70,000 tax-free award for Canadian Armed Forces members and veterans who, since April 2006, experienced a severe and traumatic injury or developed an acute disease caused by a sudden and single event which resulted in an immediate and severe impairment and interference in quality of life. The tax expenditure associated with the non-taxation of this award is included in the measure "Non-taxation of veterans' Disability Awards and Critical Injury Benefits".

Corporate Income Tax

Patronage Dividends Paid as Shares by Agricultural Co-operatives

To support the capitalization of agricultural co-operatives, Budget 2005 introduced a temporary measure to provide a tax deferral that applies to patronage dividends paid to members by an eligible agricultural co-operative in the form of eligible shares. To be eligible for this tax deferral, a share must be issued after 2005 and before 2016. Budget 2015 announced the extension of this measure to eligible shares issued before 2021.

Preferential Tax Rate for Small Businesses

A preferential tax rate for small businesses has been in effect since 1972. It is currently set at 11% and generally applies to the first $500,000 per year of qualifying active income. The $500,000 income limit begins to be reduced when a Canadian-controlled private corporation's taxable capital reaches $10 million, and is eliminated when taxable capital reaches $15 million. Budget 2015 announced that the preferential small business tax rate will be reduced to 9% by 2019. This 2-percentage-point reduction will be phased in as follows:

  • 10.5% effective January 1, 2016;
  • 10% effective January 1, 2017;
  • 9.5% effective January 1, 2018; and
  • 9% effective January 1, 2019.

In conjunction with the reduction in the small business tax rate, Budget 2015 also adjusted the gross-up factor and dividend tax credit rate applicable to non-eligible dividends (generally dividends distributed from corporate income taxed at the small business tax rate) to ensure the appropriate tax treatment of dividend income.

Accelerated Capital Cost Allowance for Manufacturing or Processing Machinery and Equipment

In 2007, the Government introduced an accelerated capital cost allowance to encourage investment in machinery and equipment used in manufacturing and processing. This measure, which provided a 50% straight-line depreciation rate, expired at the end of 2015. Budget 2015 announced the provision of an accelerated capital cost allowance at a rate of 50% on a declining-balance basis for eligible assets acquired after 2015 and before 2026 primarily for use in Canada for the manufacturing and processing of goods for sale or lease.

Accelerated Deductibility of Some Canadian Exploration Expenses

Canadian Exploration Expenses are fully deductible in the year incurred and may be carried forward indefinitely for use in future years. In addition to the expenses associated with the physical exploration for a resource, eligible expenses can include the cost of certain environmental studies and community consultations that are carried out for the purpose of facilitating the physical exploration. In the past, environmental studies and community consultations required to pursue an exploration project were not always eligible for treatment as Canadian Exploration Expenses. On March 1, 2015, the Government announced that it would modify the tax rules to ensure that the costs of environmental studies and community consultations that are required in order to obtain an exploration permit will be eligible for treatment as Canadian Exploration Expenses.[4] The change would apply to expenses incurred after February 2015.

Accelerated Capital Cost Allowance for Liquefied Natural Gas Facilities

Equipment and structures used for natural gas liquefaction have generally been eligible for capital cost allowance (CCA) at a rate of 8 % (Class 47). Non-residential buildings, at a facility that liquefies natural gas, have been eligible for a CCA rate of 6% (4% under Class 1 plus an additional 2% allowance for non-residential buildings). On February 19, 2015, the Government announced the provision of accelerated CCA treatment for such assets used in facilities that liquefy natural gas. The accelerated CCA is provided by means of two additional allowances: an additional 22% allowance (that brings the CCA rate up to 30%) for Class 47 property used in Canada in connection with natural gas liquefaction; and an additional allowance that brings the CCA rate up to 10% for buildings that are part of facilities that are used to liquefy natural gas. These changes apply to property acquired after February 19, 2015 and before 2025.

Refundable Taxes on Investment Income of Private Corporations

Given that corporate tax rates are generally lower than personal tax rates, special refundable taxes are imposed on investment income of private corporations in order to limit the ability of individuals to defer taxation by holding investments in a private corporation. On December 7, 2015, the Government proposed to increase these refundable taxes (and the related dividend refund rate) effective January 1, 2016 in order to reflect the new 33% top personal income tax rate applicable as of that date.[5]

Goods and Services Tax

Zero-Rating of Feminine Hygiene Products

GST/HST relief for feminine hygiene products was proposed by way of a Notice of Ways and Means Motion tabled in Parliament on May 28, 2015.[6] The Motion proposed that effective July 1, 2015, sanitary napkins, tampons, sanitary belts, menstrual cups and other similar products that are marketed exclusively for feminine hygiene purposes would be zero-rated.


1     At the time of production of this report, these changes were still subject to Parliamentary approval.

2     At the time of production of this report, this change was still subject to Parliamentary approval.

3     At the time of production of this report, these changes were still subject to Parliamentary approval.

4     At the time of production of this report, this change was still subject to Parliamentary approval.

5     At the time of production of this report, this change was still subject to Parliamentary approval.

6     At the time of production of this report, this change was still subject to Parliamentary approval.

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