On Tuesday, April 21, 2015 Federal Finance Minister Joe Oliver tabled the Government’s budget. Here are the measures that could impact your business’ and family’s future income taxes.
PERSONAL INCOME TAX MEASURES
Tax-Free Savings Account
Increases the TFSA annual contribution limit to $10,000 effective January 2015.
Home Accessibility Tax Credit
Introduces a new non-refundable Home Accessibility Tax Credit of 15 per cent on up to $10,000 of eligible expenditures per calendar year, per qualifying individual (individuals who are 65 years of age or older and persons with disabilities). The expenditure’s limit can not exceed $10,000 per eligible dwelling.
Minimum Withdrawal Factors for Registered Retirement Income Funds
Adjusts the RRIF minimum withdrawal factors that apply in respect of ages 71 to 94. The new factors will be substantially lower than the existing factors and will apply to the 2015 and subsequent taxation years.
Lifetime Capital Gains Exemption for Qualified Farm or Fishing Property
Increases the Lifetime Capital Gains Exemption to apply to up to $1 million of capital gains realized by an individual on the disposition of qualified farm or fishing property. Will apply to dispositions that occur on or after April 21, 2015.
Registered Disability Savings Plan – Legal Representation
Allows a qualifying family member to become the plan holder of a Registered Disability Savings Plan for an adult individual who may lack the capacity to enter into a contract.
Repeated Failure to Report Income Penalty
Amends the repeated failure to report income penalty to apply in a taxation year only if a taxpayer fails to report at least $500 of income in the year and in any of the three preceding taxation years.
Information Sharing for the Collection of Non-Tax Debts
Amends the laws to permit the sharing of taxpayer information within the Canada Revenue Agency in respect of non-tax debts under certain federal and provincial government programs.
Transfer of Education Credits – Effect on the Family Tax Cut
Revises the calculation of the Family Tax Cut for the 2014 and subsequent taxation years to ensure that couples claiming the Family Tax Cut and transferring education-related credits between themselves receive the appropriate value of the Family Tax Cut.
BUSINESS INCOME TAX MEASURES
Small Business Tax Rate
Proposes a two-percentage point decrease in the small business tax rate (currently of 11-per-cent) over 4 years commencing January 2016, i.e., a 1/2 % decrease per year over 4 years.
Manufacturing and Processing Machinery and Equipment: Accelerated Capital Cost Allowance
Provides an accelerated CCA rate of 50 per cent on a declining-balance basis for machinery and equipment acquired by a taxpayer after 2015.
Quarterly Remitter Category for New Employers
Decreases the required frequency of remittances for the smallest new employers by allowing eligible employers to immediately remit on a quarterly basis.
INTERNATIONAL TAX MEASURES
Streamlining Reporting Requirements for Foreign Assets (Form T1135)
Simplifies the foreign asset reporting system for taxation years that begin after 2014. If the total cost of a taxpayer’s specified foreign property is less than $250,000 throughout the year, the taxpayer will be able to report these assets to the Canada Revenue Agency under a new simplified foreign asset reporting system.
Update on the Automatic Exchange of Information for Tax Purposes
Canada and the other G-20 countries endorsed a new common reporting standard for automatic information exchange. Under the new standard, foreign tax authorities will provide information to the Canada Revenue Agency relating to financial accounts in their jurisdictions held by Canadian residents. The Canada Revenue Agency will, on a reciprocal basis, provide corresponding information to the foreign tax authorities on accounts in Canada held by residents of their jurisdictions.
If you have any questions as to how these measures could impact you, please do not hesitate to contact us.