The budget could also include further streamlining and improving the SR&ED tax incentive program. Based on recommendations from the October 2011 Jenkins report, "Innovation Canada: A Call to Action", these improvements could include the government implementing its commitment to direct savings generated by previous changes to support innovative private-sector businesses.
"I don't expect we are going to see any wide-ranging tax measures announced in the budget this year," says Elio Luongo, Canadian Managing Partner, Tax, KPMG in Canada. "Given the government's plans to balance the budget in next few years, we don't anticipate any major increases in spending. But the federal government has publicly stated that they plan to introduce more measures to close 'tax loopholes'-so we should brace ourselves for a few announcements with that in mind."
This year's report by the House of Commons Finance Committee, Jobs, Growth, Productivity and Demographic Change: Challenges and Opportunities for Canada, highlights additional 2013 budget considerations:
- Business tax changes: improve the SR&ED tax incentive program to offer more direct support to innovative private-sector businesses; explore expanding the accelerated capital cost allowance to encourage construction of domestic infrastructure in the oil and gas sector.
- Personal tax changes: continue to implement pooled retirement pension plans; examine tax provisions in relation to estate and succession planning and their impact on the transfer of family owned businesses; explore tax incentives to assist skilled workers and their mobility in an effort to support skilled trade in Canada.
- Charities and NPOs: changes to the tax credit for charitable donations to facilitate greater charitable giving; eliminate or lower capital gains tax on charitable donations of real estate and similar property and the shares of private corporations.
The Finance Committee also recommends that the government find ways to simplify the Income Tax Act, and establish a commission to undertake a comprehensive review of the tax system to ensure its fairness and neutrality by closing "loopholes" that allow Canadians to avoid paying tax.
KPMG will be on the frontline on budget day to provide commentary and explain the budget's impact. Budget highlights will be made available late afternoon on budget day.
KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG member firms around the world have 152,000 professionals, in 156 countries.
The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.