TORONTO/OTTAWA, March 21, 2013—In an effort to balance the books by 2015, today’s federal budget focused mostly on jobs, the economy and closing “tax loopholes”.
“The theme for today’s budget was jobs, growth and long-term prosperity,” says Elio Luongo, Canadian Managing Partner, Tax with KPMG in Canada. “The focus on jobs and growth is a continuation of a theme to try and manage current issues including bridging the skills gap in Canada while balancing the budget by 2015. The government has introduced a number of measures to help finance this with a focus on tax integrity and closing ‘tax loopholes’. Areas as diverse as tax loss trading, life insurance products, the mining industry and labour sponsored venture incentives were touched.”
KPMG on The Hill
Budget 2013 highlights include:
Personal tax changes
- The federal effective tax rate on non-eligible dividends will increase to 21.22% (from 19.58%).
- The lifetime capital gains exemption is increased to $800,000 (from $750,000) on dispositions of qualified property (e.g. qualified small business corporation shares and qualified farm and qualified fishing property) by individuals effective for the 2014 taxation year.
- Introduction of a temporary first-time charitable donor’s super credit. A first-time donor will be entitled to a 40% federal credit for donations of $200 or less, and a 54% federal credit for the portion of donations over $200 but not exceeding $1,000. Only donations of money will qualify for this credit and it can only be claimed once.
Business tax changes
- Proposes to extend for one year the temporary Hiring Credit for Small Business.
- Proposes additional federal support for business innovation, continuing to respond to the Expert Review Panel on Research and Development, the Jenkins Panel, in October 2011.
International tax changes
- Proposes a series of measures to extend the thin capitalization rules to alternative investment structures for investing in Canada.
- Proposes measures to better align the deductions available for expenses in the mining sector with those available in the oil and gas sector.
- The budget proposes two measures to simplify employer compliance with the GST/HST rules affecting employers that participate in a registered pension plan.
The KPMG Perspective
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.
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