Archived - Tax Expenditures and Evaluations 2007 : 3

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Table 2
Corporate Income Tax Expenditures*

	Estimates			Projections1
	2002	2003	2004	2005	2006	2007	2008	2009
	($ millions)
Charities, Gifts and Contributions
Deductibility of charitable donations2	295	245	470	345	385	410	400	405
Deductibility of gifts of cultural property   and ecologically sensitive land	26	10	24	13	14	14	14	14
Deductibility of gifts to the Crown	S	S	S	S	S	S	S	S
Non-taxation of registered charities	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Non-taxation of other non-profit organizations   (other than registered charities)3	175	160	150	140	165	190	195	215
Political contribution tax credit4	S	S	S	S	S	S	–	–
Culture
Canadian film or video production tax credit	155	155	185	180	190	200	210	220
Non-deductibility of advertising   expenses in foreign media	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Federal-Provincial Financing Arrangements
Income tax exemption for provincial and   municipal corporations	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Transfer of income tax room to provinces	1,065	1,210	1,455	1,645	1,830	1,945	2,040	2,165
Logging tax credit5	22	16	55	42	58	43	45	47
General Business and Investment
Accelerated write-off of capital assets and   resource-related expenditures	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Deferral through capital gains rollovers	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Taxation of capital gains upon realization	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Partial inclusion of capital gains6	2,370	2,050	2,815	3,575	5,160	5,065	5,070	5,040
Expensing of advertising costs7	-110	-150	5	-5	20	50	50	50
Atlantic investment tax credit
Earned and claimed in current year	95	65	125	135	140	145	150	160
Claimed in current year but earned in prior years	190	96	160	280	220	230	240	250
Earned in current year but carried  back to prior years	8	13	3	5	5	5	6	6
Total tax expenditure	293	174	288	420	365	380	396	416
Scientific research and experimental   development investment tax credit8
Earned and claimed in current year	1,855	1,715	1,910	2,135	2,390	2,680	3,000	3,355
Claimed in current year but earned  in prior years	440	545	1,055	1,180	1,320	1,480	1,655	1,850
Earned in current year but carried  back to prior years	99	97	98	99	100	100	100	105
Total tax expenditure	2,394	2,357	3,063	3,414	3,810	4,260	4,755	5,310
Write-off of capital assets before available for use	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
	Estimates			Projections1
	2002	2003	2004	2005	2006	2007	2008	2009
	($ millions)
Apprenticeship job creation tax credit	–	–	–	–	145	200	205	210
Investment tax credit for child care spaces9	–	–	–	–	–	S	S	S
Small Business
Deduction of allowable business  investment losses10	31	27	17	18	24	26	26	27
Low tax rate for small businesses11	3,610	3,245	3,035	3,305	3,770	4,115	4,215	4,195
Accelerated rate reduction for  small businesses12	65	45	10	–	–	–	–	–
Non-taxation of provincial assistance for   venture investments in small businesses	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
International
Exemption from Canadian income tax   of income earned by non-residents from   the operation of a ship or aircraft in   international traffic	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Exemption from tax for international banking centres	S	S	S	S	S	S	S	S
Exemptions from non-resident withholding tax13
Dividends14	395	465	655	1,000	1,025	990	1,035	1,085
Interest
On deposits	195	140	115	195	160	170	180	185
On corporate debt15	175	215	395	240	255	270	470	600
Other16	245	300	270	215	280	295	315	320
Rents and royalties
Copyright royalties	28	26	23	32	29	30	32	34
Rents and royalties for the use of,   or right to use, other property	115	120	98	120	120	125	130	140
Research and development royalties	4	4	3	S	3	3	4	4
Natural resource royalties	S	S	S	S	S	S	S	S
Rents from real property	S	S	S	S	S	S	S	S
Management fees	76	70	74	73	76	80	84	88
Non-taxation of life insurance companies’
world income	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Tax exemption on income of foreign affiliates   of Canadian corporations	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Sectoral Measures
Farming
Cash-basis accounting	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Deferral of income from destruction of livestock17	S	S	3	S	S	S	S	S
Deferral of income from grain sold through   cash purchase tickets18	12	S	S	13	-6	S	S	S
Flexibility in inventory accounting	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Agricultural cooperatives19	–	–	–	–	30	30	30	30
	Estimates			Projections1
	2002	2003	2004	2005	2006	2007	2008	2009
	($ millions)
Resource
Corporate mineral exploration tax credit20	–	S	13	20	23	26	31	36
Deductibility of contributions to a qualifying   environmental trust	S	S	S	7	3	3	3	3
Earned depletion21	23	13	22	41	42	39	34	33
Net impact of the resource allowance and   the non-deductibility of Crown royalties   and mining taxes22	360	115	10	105	50	15	–	–
Tax rate on resource income23	-210	-220	-525	-610	-505	-115	–	–
Transitional arrangement for the Alberta   Royalty Tax Credit24	–	S	S	S	S	S	–	–
Other Sectors
Exemption from branch tax for   transportation, communications, and   iron ore mining corporations	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Film or video production services tax credit25	77	98	105	110	120	125	130	140
Low tax rate for credit unions	80	73	60	64	72	76	77	79
Manufacturing and processing allowance26	1,105	465	80	–	–	–	–	–
Surtax on the profits of tobacco manufacturers27	-75	-75	-55	-50	n.a.	n.a.	n.a.	n.a.
Other Measures
Deductibility of countervailing and   anti-dumping duties	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Deductibility of earthquake reserves	5	5	5	5	6	6	6	6
Deferral through use of billed-basis   accounting by professional corporations	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Holdback on progress payments   to contractors28	5	30	50	50	50	50	50	50
Interest credited to life insurance policies	68	76	81	84	88	91	95	98
Non-taxation of certain federal   Crown corporations	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Memorandum Items
Mechanisms for the Integration of Personal   and Corporate Income Tax
Investment corporation deduction	S	S	S	S	S	S	S	S
Refundable capital gains for investment and   mutual fund corporations29	35	55	115	345	155	175	185	190
Refundable taxes on investment income of   private corporations30
Additional Part I tax31	-675	-790	-1,145	-1,555	-2,100	-2,285	-2,675	-3,000
Part IV tax	-1,940	-1,960	-1,990	-2,170	-2,675	-2,855	-3,015	-3,165
Dividend refund	3,805	3,265	3,945	4,475	6,065	6,595	6,960	7,315
Net tax expenditure	1,190	515	810	750	1,140	1,235	1,185	1,140
	Estimates			Projections1
	2002	2003	2004	2005	2006	2007	2008	2009
	($ millions)
Recognition of Expenses Incurred to Earn Income
Deduction for intangible assets	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Deductibility of provincial royalties   (joint venture payments) for the Syncrude   project (remission order)32	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Loss Offset Provisions
Capital loss carry-overs
Net capital losses carried back33	800	365	115	89	90	97	105	110
Net capital losses applied to current year	155	300	355	475	645	640	640	635
Farm and fishing loss carry-overs
Farm and fishing losses carried back34	6	11	12	15	18	19	20	21
Farm and fishing losses applied to current year	24	19	25	33	45	27	27	28
Non-capital loss carry-overs
Non-capital losses carried back	2,315	2,265	1,615	1,760	1,855	1,955	2,060	2,220
Non-capital losses applied to current year35	3,375	3,280	3,765	4,575	4,420	4,595	4,200	4,275
Other
Non-resident-owned investment corporation refund36	430	135	–	–	–	–	–	–
Partial deduction of meals and entertainment expenses37	270	280	285	300	325	330	305	295
Patronage dividend deduction38	390	330	270	285	320	335	325	335
* The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See the publication Tax Expenditures: Notes to the Estimates/Projections, published in 2004 and available on the Department of Finance website (www.fin.gc.ca), for a discussion of the reasons for this. [Return]

Notes:

¹

Unless otherwise indicated in the footnotes, changes in the projections from those in last year’s edition of this document as well as variations from year to year result from changes in the explanatory economic variables upon which the projections are based. These changes and variations also reflect the availability of new data and improvements to the methodology used to derive the estimates/projections. Estimates from 2002 to 2005 as well as projections for 2006 and subsequent years reflect the impact of the reduction in the general corporate income tax rate to 25 per cent on January 1, 2002, 23 per cent on January 1, 2003, 21 per cent on January 1, 2004, 19.5 per cent on January 1, 2008 and 19.0 per cent on January 1, 2009. The corporate surtax, which raises these rates by 1.12 percentage points, will be eliminated on January 1, 2008.

²

Donations in 2004 were significantly higher than the historical average. Projections for 2007 onwards include projected tax expenditures associated with the Budget 2007 announcement for donations of medicines to the developing world.

³

The 2005 estimate is based on information from 2004 corporate income tax returns and gross domestic product growth between 2004 and 2005.

⁴

The Federal Accountability Act prohibits political contributions from corporations as of January 1, 2007. Some tax expenditure occurs in 2007, however, as many firms reporting income in the 2007 taxation year earned a portion of that income in the 2006 calendar year.

⁵

The tax expenditure in 2004 and 2005 reflects significant improvements in industry performance. The high use of the credit in 2006 in part reflects the settlement of the Canada-U.S. softwood lumber dispute. Subsequent years may not be as strong, so the 2007 projection is an average of the previous four years.

⁶

The 2006 projection reflects preliminary corporate income tax returns.

⁷

The amount of this tax expenditure can fluctuate significantly from year to year depending upon the amount of advertising expenses claimed. Since this tax expenditure is estimated on a cash-flow basis, annual advertising costs above the average of the previous two years will result in a positive estimate of the tax expenditure. Advertising costs under this average will result in a negative estimate. For more information about this measure, refer to the document Tax Expenditures: Notes to the Estimates/Projections, published in 2004 and available on the Department of Finance website at www.fin.gc.ca.

⁸

The tax expenditure for 2005 is based on estimated growth of investment tax credits claimed between 2004 and 2005.

⁹

This measure was introduced in Budget 2007 (see the "What’s New in the 2007 Report" section for more details).

¹⁰

The amount of this tax expenditure can fluctuate from year to year depending on the amount of current-year losses and the availability of income against which to apply these losses.

¹¹

The reduction in the tax expenditure from 2002 to 2004 results from reductions in the benchmark rate. The tax expenditure for 2003 and subsequent years reflects the impact of the 2003, 2004 and 2006 budget increases in the amount of income eligible for the small business deduction, and the 2006 budget and 2007 Economic Statement proposals to reduce the small business tax rate. The decrease from last year’s projection for 2006 is mainly due to a decrease in projected taxable income.

¹²

This measure was announced in Budget 2000 and became effective January 1, 2001. On that date the general federal corporate income tax rate on income between $200,000 and $300,000 earned by a Canadian-controlled private corporation from an active business carried on in Canada was reduced to 21 per cent. Declines in the tax expenditure are a result of the reduction in the general corporate income tax rate and the increase, announced in Budget 2003, in the amount of income eligible for the small business deduction. This measure was effectively eliminated on January 1, 2004, when the general corporate income tax rate was reduced to 21 per cent. Some tax expenditure occurs in 2004, however, as many firms reporting income in the 2004 taxation year earned a portion of that income in the 2003 calendar year.

¹³

Estimates and projections were computed on the basis of an analysis of payments to non-residents and withholding tax collections available for 1997 to 2005. Variations from last year’s estimates and projections are mainly due to revised and new data, as well as to certain minor methodological changes.

¹⁴

This category includes the tax expenditures attributable to the exemption of estate and trust income distributions, including distributions by income trusts. The significant increase in 2005 reflects growth in income trust distributions and dividend payments to residents of the United States.

¹⁵

Projections for this category reflect the changes announced in Budget 2007 with respect to withholding tax on interest payments, and are based on the assumption that interest payments to arm’s length foreign lenders will be exempt from withholding tax as of January 2008, while the rate of withholding on interest payments to non-arm’s length U.S. lenders will be reduced to 7 per cent as of January 2008 and to 4 per cent as of January 2009. The tax expenditure associated with the exemption of those payments is higher than the corresponding budget cost estimate as the latter also accounts for the reduction in foreign tax credits claimed in Canada that will follow from the elimination of U.S. withholding tax on interest paid to Canada from U.S. borrowers.

¹⁶

This category includes interest paid to non-resident persons or organizations that would be exempt from income tax in Canada were they residents in Canada. Also included is interest paid under certain securities-lending arrangements exempt under subparagraph 212(1)(b)(xii) of the Income Tax Act, and interest exempt under certain other domestic and treaty provisions.

¹⁷

Estimates and the 2006 projection are based on actual data obtained from Statistics Canada.

¹⁸

Projections are calculated using a historical average growth rate. Since this tax expenditure is estimated on a cash-flow basis, an increase in the balance of uncashed grain tickets represents additional income that is being deferred and results in a positive tax expenditure. A decrease in the balance of uncashed grain tickets indicates that less income is being deferred and results in a negative tax expenditure. The tax expenditure estimates and projections are volatile over time since a small number of corporations are affected in a very specific sector. Estimates and the 2006 projection are based on actual data obtained from Statistics Canada.

¹⁹

This measure applies only to patronage dividends paid after 2005. See the "What’s New in the 2005 Report" section of the 2005 Tax Expenditures and Evaluations document for further details about this measure.

²⁰

This credit was introduced in Budget 2003 and phased in starting at 5 per cent in 2003, 7 per cent in 2004 and 10 per cent in subsequent years. In the prior years, tax expenditure estimates for this credit were based primarily on exploration estimates. The estimates have now been modified to incorporate actual tax collection information for 2003, 2004 and 2005. Cost estimates include: (a) the value of credits used in the year, whether they were earned in the current year or carried forward from a previous year, and (b) credits carried back to a previous year in the current year’s tax return.

²¹

Additions to earned depletion pools were eliminated as of January 1, 1990. The tax expenditure reflects use of the existing earned depletion pools.

²²

The tax expenditure is the revenue cost of the resource allowance net of non-deductible Crown royalties and provincial mining taxes. Over a five-year period beginning in 2003, the resource allowance was phased out and a deduction for Crown royalties and mining taxes phased in, so that by 2007, this tax expenditure is eliminated. Costs for 2007 relate to companies that do not have a December 31 year-end for which the 2007 year includes a portion of 2006. Year-to-year variations reflect volatility in the relationship between the resource allowance and Crown royalties. See the technical paper "Improving the Income Taxation of the Resource Sector in Canada" (Department of Finance, March 2003) for further details.

²³

The general corporate income tax rate was extended to resource income over a five-year phase-in period beginning in 2003. Although the rate difference between the general and resource rates no longer exists as of 2007, there are still costs in that year associated with 2006 rates for companies with off-calendar taxation years, for which the 2007 taxation year includes some income earned in 2006.

²⁴

The Alberta government announced on September 21, 2006, that the Alberta Royalty Tax Credit (ARTC) program would be discontinued effective January 1, 2007. Although the ARTC no longer exists as of 2007, there are still costs in that year associated with the measure for companies with off-calendar taxation years, for which the 2007 taxation year includes some royalties earned in 2006. The estimate for 2005 is derived using the growth rate in royalty claims and oil and gas tax receipts.

²⁵

The estimates for 2004 and 2005 are based on 2003 corporate income tax return data and the growth rate of gross domestic product.

²⁶

Although this tax expenditure was effectively eliminated on January 1, 2004, when the general corporate income tax rate was reduced to 21 per cent, many firms reporting income in the 2004 taxation year earned a portion of that income in the 2003 calendar year, before the tax expenditure was effectively eliminated.

²⁷

The decrease in this tax expenditure after 2003 is due to the decrease in tobacco manufacturers’ profits. For confidentiality reasons, projections for 2006 to 2009 are not published.

²⁸

The amount of this tax expenditure can fluctuate significantly from year to year depending primarily on the level of construction activity. Therefore, the 2004 and 2005 estimates and the projections reflect the historical average for this tax expenditure.

²⁹

The amount of this tax expenditure can fluctuate from year to year depending on the amount of capital gains withdrawn by the shareholders of these corporations.

³⁰

Refundable tax provisions of the corporate income tax system provide some integration of the corporate and personal income tax regimes. For more information about these measures, refer to the document Tax Expenditures: Notes to the Estimates/Projections, published in 2004 and available on the Department of Finance website at www.fin.gc.ca.

³¹

This item includes the additional 62⁄3 per cent refundable tax on investment income as well as the Part I tax paid on investment income in excess of the benchmark rate.

³²

The cost of the Syncrude Remission Order ("Order Respecting the Remission of Income Tax for the Syncrude Project," P.C. 1976-1026, May 6, 1976 [C.R.C. 1978 Vol. VII, c. 794]) is published annually in the Public Accounts of Canada (ISBN 0-660-177792-7). The order expired on December 31, 2003.

³³

The large value in 2002 reflects, for the most part, the capital losses recorded that year resulting from declines in the market value of technology stocks. Methodological improvements have resulted in lower tax expenditures in all years compared to the 2006 publication.

³⁴

The availability of new data allows the separation of the farm and fishing loss carry-overs into two categories. This tax expenditure is presented for the first time in this year’s report.

³⁵

Higher estimates and projections relative to last year’s publication reflect the availability of more recent data indicating that more losses than previously estimated are being applied against taxable income due to the increased profitability of Canadian companies. In addition, companies claiming such losses have, on average, a higher effective tax rate than previously estimated. Finally, this year’s estimates and projections are also affected by methodological improvements in calculating the effective tax rate.

³⁶

This measure was repealed in 2000. To allow for an orderly restructuring of their operations, however, existing non-resident-owned investment corporations were entitled to retain their status until the end of their last taxation year that began before 2003.

³⁷

Budget 2007 increased to 80 per cent from 50 per cent, over five years, the deductible portion of the cost of food and beverages consumed by long-haul truck drivers during certain long-haul trips. This measure will also apply to employers that pay, or reimburse, such costs incurred by long-haul truck drivers that they employ. This measure applies to eligible expenses incurred on or after March 19, 2007.

³⁸

The 2005 estimate is based on information from 2004 corporate income tax returns and gross domestic product growth between 2004 and 2005.

Table 3
Goods and Services Tax Expenditures*

	Estimates1				Projections2
	2002	2003	2004	2005	20063	20073	20083	20093
	($ millions)
Aboriginal Self-Government
Refunds for Aboriginal self-government4	S	S	S	S	S	S	S	S
Business
Exemption for domestic financial services5	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Exemption for ferry, road and bridge tolls6	5	10	5	10	10	5	5	5
Exemption and rebate for legal aid services	25	25	25	25	25	25	20	25
Non-taxability of certain importations7	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Rebates for foreign visitors8	85	75	75	80	70	15	n.a.	n.a.
Foreign Convention and Tour Incentive Program8	n.a.	n.a.	n.a.	n.a.	n.a.	10	10	10
Small suppliers’ threshold	165	175	185	195	195	190	170	175
Zero-rating of agriculture and   fish products and purchases9	S	S	S	S	S	S	S	S
Zero-rating of certain purchases   made by exporters	S	S	S	S	S	S	S	S
Charities and Non-Profit Organizations
Exemption for certain supplies made by   non-profit organizations	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Rebates for registered charities	255	270	285	290	290	280	245	255
Rebates for non-profit organizations	65	70	75	75	75	70	60	65
Education
Exemption for education services (tuition)6	435	480	515	550	535	520	455	475
Rebates for book purchases made by   qualifying public institutions	30	30	30	30	30	30	25	25
Rebates for colleges	85	85	80	80	80	75	65	70
Rebates for schools	380	380	400	425	425	410	355	375
Rebates for universities	205	240	260	270	270	260	225	235
Health Care
Exemption for health care services6	425	475	505	570	555	540	470	495
Rebates for hospitals	395	425	465	515	515	495	435	455
Zero-rating of medical devices6	130	135	150	160	155	150	130	140
Zero-rating of prescription drugs6	465	475	530	570	555	540	470	490
Households
Exemption for child care and personal services6	120	130	140	150	150	145	125	130
Goods and services tax/harmonized sales tax credit10	3,070	3,180	3,330	3,450	3,515	3,585	3,650	3,710
Zero-rating of basic groceries6	3,455	3,620	3,740	3,945	3,855	3,735	3,255	3,410
	Estimates1				Projections2
	2002	2003	2004	2005	20063	20073	20083	20093
	($ millions)
Housing
Exemption for sales of used residential   housing and other personal-use real property	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
Exemption for residential rent (long-term)6	1,265	1,340	1,415	1,510	1,475	1,430	1,240	1,300
Rebates for new housing	785	835	920	950	965	960	880	935
Rebates for new residential rental property	45	50	55	55	55	55	50	55
Municipalities
Exemption for municipal transit6	100	105	160	170	165	160	140	145
Exemption for water and basic garbage   collection services6	180	185	230	245	240	230	200	210
Rebates for municipalities11	725	805	1,435	1,725	1,715	1,665	1,450	1,520
Memorandum Items
Recognition of Expenses Incurred to Earn Income
Rebates to employees and partners12	110	115	115	115	110	100	85	85
Other
Exemption for quick method accounting	205	215	230	245	240	235	205	215
Partial input tax credits for meals and   entertainment expenses13	125	130	130	140	135	135	115	120
* The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See the publication Tax Expenditures: Notes to the Estimates/Projections, published in 2004 and available on the Department of Finance website (www.fin.gc.ca), for a discussion of the reasons for this. [Return]

Notes:

¹

Unless otherwise indicated in the footnotes, estimates are based on administrative data from the Canada Revenue Agency and Statistics Canada.

²

Unless otherwise indicated in the footnotes, changes in the projections from last year’s report are the result of revised forecasts of economic indicators prepared by the Department of Finance and The Conference Board of Canada.

³

The goods and services tax rate was lowered from 7 per cent to 6 per cent effective July 1, 2006, and to 5 per cent effective January 1, 2008. The 2006 rate reduction lowers the tax expenditures for 2006 and 2007, and the 2008 rate reduction reduces them further for 2008 and 2009. In addition, there is more uncertainty than usual in tax expenditure projections (2006–2009), as the economic effects of the rate changes are not yet reflected in the underlying data.

⁴

These refunds are paid to Aboriginal governments that have an agreement providing for a goods and services tax/harmonized sales tax (GST/HST) refund for goods and services acquired for self-government activities.

⁵

Vendors are not entitled to claim input tax credits to recover the GST/HST paid on inputs to these products. Final consumers and businesses do not pay the direct sales tax on exempt goods and services.

⁶

The National GST Model used to generate these estimates is based on the 2003 national input-output tables from Statistics Canada and the latest release of the National Income and Expenditure Accounts.

⁷

Certain importations are tax-free including, for example, duty-free personal importations by Canadian travellers.

⁸

The Visitor Rebate Program has been replaced by the Foreign Convention and Tour Incentive Program effective April 1, 2007 (see the "What’s New in the 2007 Report" section for details). It does not include amounts credited by suppliers at the point of sale.

⁹

Vendors of zero-rated products are entitled to claim input tax credits to recover the GST/HST paid on inputs to exempt products. Final consumers and businesses pay no tax on zero-rated goods and services.

¹⁰

Estimates are based on personal income tax data. The GST rate reductions do not affect the credit.

¹¹

The rebate rate for municipalities increased from 57.14 per cent to 100 per cent effective February 1, 2004.

¹²

This item includes the apprentice vehicle mechanics’ tools deduction.

¹³

Based on estimated expense claims reported for the personal and corporate income tax systems. Projections include the increased deductibility of meal expenses for long-haul truck drivers.

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