Budget 2014 highlights include the following proposals:
- Job creation:
- Funding of approximately $229 million for apprenticeships and internships, including:
- $40 million over four years to the Canada Accelerator and Incubator Program to help entrepreneurs create new companies and provide mentoring and other resources.
- $40 million towards supporting up to 3,000 internships in high-demand fields.
- $15 million annually towards supporting up to 1,000 internships in small and medium-sized enterprises.
- $150,000 to increase mentorship among women entrepreneurs.
- Innovation funding:
- Additional funding for research and innovation, including the creation of the Canada First Research Excellence fund with $1.5 billion in funding over the next 10 years for certain post-secondary institutions.
- Tax transparency and Base Erosion and Profit Shifting (BEPS) consultations:
- Focus on key areas, such as aggressive tax planning using preferential tax regimes and treaty shopping, hybrid instrument mismatches, transfer pricing methodologies, and other potential areas for abuse under taxation systems around the world.
- The budget is requesting comments from stakeholders on a number of broad questions intended to provide the government with a framework for Canada’s own BEPS action plan.
- International tax changes:
- Expand the existing anti-avoidance rules in the thin capitalization provisions and to add a back-to-back loan provision.
- Amend the current rule aimed at preventing Canadian taxpayers from shifting income from the insurance of Canadian risks offshore.
- Business tax changes:
- Proposes to repeal the Eligible Capital Property regime, replacing it with a new Capital Cost Allowance (CCA) class and transfer taxpayers’ existing Cumulative Eligible Capital pools to the new CCA class.
- Personal tax changes:
- Proceed with measures to eliminate the tax benefits that arise from taxing at graduated rates the taxable income of testamentary trusts.
- Eliminate the benefits for immigrant trusts that end after 2014 if the 60-month exemption is applied.
- Apply the tax on split income where a minor is allocated income from a partnership or trust that is derived from business or rental activities conducted with third parties.
KPMG’s Perspective on the Budget
“The themes for today’s budget are jobs, growth and innovation. The focus on jobs and growth is to manage current issues including bridging the skills gap in Canada while balancing the budget by 2015. The Harper Government has also introduced a number of tax measures aimed at closing “tax loopholes” in line with the government’s continued focus on tax fairness measures and tax transparency.”
KPMG Spokespeople Across the Country
KPMG’s Tax professionals from coast to coast are available to provide regional insight into the federal budget. With more than 30 offices across the country, our regional professionals can comment on the budget’s local impact for Canadians and businesses.
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