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Archived - Tax Expenditures and Evaluations 2010

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Preface 

The Department of Finance has published tax expenditures for personal and corporate income taxes as well as for the Goods and Services Tax since 1994. Beginning in 2000, the tax expenditure report has been separated into two documents. This document, Tax Expenditures and Evaluations, is published annually. It provides estimates and projections for broadly defined tax expenditures as well as evaluations and analytical papers addressing specific tax measures. This year's edition includes two analytical papers entitled “Taxes and the Preferred Source of Corporate Finance” and “The Response of Individuals to Changes in Marginal Income Tax Rates”.

The second document, Tax Expenditures: Notes to the Estimates/Projections, is a reference document for readers who want descriptions of, or information on the objectives of, particular tax expenditures or who wish to know more about how the estimates and projections are calculated. This document is published periodically and a new 2010 edition is available on the Department of Finance website.

Part 1
Tax Expenditures: Estimates and Projections 

Introduction 

The principal function of the tax system is to raise the revenues necessary to fund government expenditures. The tax system can also be used directly to achieve public policy objectives through the application of special measures such as low tax rates, exemptions, deductions, deferrals and credits. These measures are often described as “tax expenditures” because they achieve policy objectives at the cost of lower tax revenue.

To identify and estimate tax expenditures, it is necessary to establish a “benchmark” tax structure that applies the relevant tax rates to a broadly defined tax base—e.g. personal income, business income or consumption. Tax expenditures are then defined as deviations from this benchmark. Reasonable differences of opinion exist about what should be considered a normal part of the tax system and hence about what should be considered a tax expenditure. A more detailed discussion on the calculation of the tax expenditures presented in this document is available in the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections.

This report takes a broad approach and includes estimates and projections of the revenue loss associated with all but the most fundamental structural elements of the tax system, such as the progressive personal income tax rate structure. This includes not only measures that may reasonably be regarded as tax expenditures but also other measures that may be considered part of the benchmark tax system. The latter are listed separately under “Memorandum Items.” For instance, the Dividend Tax Credit is listed under this heading because its purpose is to reduce or eliminate the double taxation of income earned by corporations and distributed to individuals through dividends. Also included under this heading are measures where data limitations do not permit a separation of the tax expenditure and benchmark components of the measure. This approach provides information on a full range of measures.

Caveats 

Care must be taken in interpreting the estimates and projections of tax expenditures in the tables for the following reasons.

  • The estimates and projections are intended to indicate the potential revenue gain that would be realized by removing individual tax measures. They are developed assuming that the underlying tax base would not be affected by removal of the measure. However, this is an assumption that is unlikely to be true in practice in some cases, as the behaviour of beneficiaries of tax expenditures, overall economic activity and other government policies could change along with the specific tax provision.
  • The cost of each tax measure is determined separately, assuming that all other tax provisions remain unchanged. Many of the tax expenditures do, however, interact with each other such that the impact of several tax provisions at once cannot generally be calculated by adding up the estimates and projections for each provision.
  • The federal and provincial income tax systems interact with each other to varying degrees. As a result, changes to tax expenditures in the federal system may have consequences for provincial tax revenues. In this publication, however, any such provincial effects are not taken into account—that is, the tax expenditure estimates and projections address strictly the federal tax system and federal tax revenue.
  • The tax expenditure estimates and projections presented in this document are developed using the latest available taxation data. Revisions to the underlying data as well as improvements to the methodology can result in substantial changes to the value of a given tax expenditure in successive publications. In addition, estimates and projections for some tax measures, such as the partial inclusion rate on capital gains, are particularly sensitive to economic parameters and hence may also differ significantly from one publication to the next.

What's New in the 2010 Report 

New tax measures were introduced and others modified in Budget 2010. Changes affecting tax expenditures are described below. They all relate to personal income tax.

Inclusion of the Universal Child Care Benefit in the Income of an Eligible Dependant

Budget 2010 announced that a single parent has the option of including the aggregate Universal Child Care Benefit amount received, in respect of all of his or her children, in the parent's income or in the income of the dependant for whom an Eligible Dependant Credit is claimed. If a single parent is unable to claim an Eligible Dependant Credit, he or she has the option of including the aggregate Universal Child Care Benefit amount in the income of one of the children for whom the Universal Child Care Benefit is paid. This measure applies to the 2010 and subsequent taxation years.

Medical Expense Tax Credit

The Medical Expense Tax Credit provides tax recognition for above-average medical and disability-related expenses incurred by individuals. For 2010, the Medical Expense Tax Credit reduces the federal tax of a claimant by 15% of eligible unreimbursed medical expenses in excess of the lesser of $2,024 and 3% of net income. An expense is generally eligible to be claimed if it is directly related to a disability or a medical condition. An expense is not generally intended to be eligible if it is ordinarily incurred by persons without a disability or a medical condition or has a substantial element of personal consumption and choice. To ensure consistency with the intent of the credit, Budget 2010 announced that expenses incurred for purely cosmetic procedures (including services and related expenses) would be ineligible to be claimed under the Medical Expense Tax Credit. Cosmetic procedures will continue to qualify for the credit if they are required for medical or reconstructive purposes. This measure applies to expenses incurred after March 4, 2010.

Employee Stock Option Deduction

If an employee acquires a security of his or her employer under a stock option agreement in the course of his or her employment, the difference between the fair market value of the security at the time the option is exercised and the amount paid by the employee to acquire the security is treated as a taxable employment benefit. If certain conditions are met, the employee is entitled to a deduction equal to one-half of the employment benefit (the stock option deduction).

Prior to Budget 2010, it was possible to structure employee stock option agreements so that if employees disposed of (“cashed out”) their stock option rights for a cash payment from the employer (or other in-kind benefit), the employment benefit was eligible for the stock option deduction while the cash payment was fully deductible by the employer.

Budget 2010 announced that both the stock option deduction and a deduction by the employer cannot be claimed for the same employment benefit. To this effect, the stock option deduction will generally be available to employees only in situations where they exercise their options by acquiring securities of their employer. An employer may continue to allow employees to cash out their stock option rights to the corporation without affecting their eligibility for the stock option deduction provided the employer makes an election to forgo the deduction for the cash payment. This measure applies to dispositions of employee stock options that occur after 4:00 p.m. Eastern Standard Time on March 4, 2010.

U.S. Social Security Benefits

Prior to 1996, pursuant to the Canada-United States Tax Convention (1980), Canadian residents receiving benefits under the social security legislation in the United States, including tier 1 railroad retirement benefits but not including unemployment benefits (“U.S. Social Security benefits”), were required to include only 50% of those benefits in computing income. Changes made to the Canada-U.S. Tax Convention effective beginning in 1996 increased the inclusion rate for U.S. Social Security benefits to 85% from 50%. Budget 2010 reinstated the 50% inclusion rate for Canadian residents who have been in receipt of U.S. Social Security benefits since before January 1, 1996 and for their spouses and common-law partners who are eligible to receive survivor benefits. This measure applies to U.S. Social Security benefits received on or after January 1, 2010.

Mineral Exploration Tax Credit for Flow-Through Share Investors

The Mineral Exploration Tax Credit is a reduction in tax, available to individuals who invest in flow-through shares, equal to 15% of specified mineral exploration expenses incurred in Canada and transferred to flow-through share investors. The credit was introduced on a temporary basis in 2000 and has been extended since then. Budget 2010 extended eligibility for the credit, for an additional year, to flow-through share agreements entered into on or before March 31, 2011. Under the one-year “look-back” rule, funds raised with the benefit of the credit in 2011, for example, can be spent on eligible exploration up to the end of 2012.

The Tax Expenditures 

Tables 1 to 3 provide tax expenditure values for personal income tax, corporate income tax and the Goods and Services Tax (GST) for the years 2005 to 2010. Values for the years 2005 to 2008 are generally based on tax data supplied by the Canada Revenue Agency, or are calculated from data supplied by Statistics Canada and other government departments and agencies. Values for the 2009 and 2010 projections are usually determined from the historical relationship between a tax expenditure and relevant economic variables. These economic variables are generally based on the forecast presented in the October 2010 Update of Economic and Fiscal Projections. See Chapter 1 of Tax Expenditures: Notes to the Estimates/Projections[1] for additional details on the methodology.

The tax expenditures are grouped according to functional categories. This grouping is provided solely for presentational purposes and is not intended to reflect underlying policy considerations.

All estimates and projections are reported in millions of dollars. The letter “S” (“small”) indicates that the absolute value of the tax expenditure is less than $2.5 million, “n.a.” signifies that data are not available to support a meaningful estimate/projection, and a dash means that the tax expenditure is not in effect. The inclusion in the report of items for which estimates and projections are not available reflects the intention to provide information on measures included in the tax system even if it is not always possible to provide their revenue impacts. Work is continuing to obtain quantitative estimates and projections where possible.

Table 1
Personal Income Tax Expenditures*
Estimates1          Projections1
 
2005 2006 2007 2008 2009 2010
($ millions)
Charitable Donations and Political Contributions
Charitable Donations Tax Credit
 (excluding donations of assets
 subject to a reduced inclusion
 rate for capital gains)2		 2,165 2,325 2,345 2,270 2,105 2,150
Donations of publicly listed securities3            
  Charitable Donations Tax Credit 68 125 165 90 100 105
  Reduced inclusion rate for capital gains 10 37 50 27 30 30
  Total tax expenditure 78 160 215 115 130 135
Donations of ecologically sensitive land3            
  Charitable Donations Tax Credit 3 4 6 9 8 6
  Reduced inclusion rate for capital gains S S S 3 3 S
  Total tax expenditure 4 5 8 11 11 7
Donations of cultural property3            
  Charitable Donations Tax Credit 22 28 22 21 19 19
  Non-taxation of capital gains 7 9 7 7 6 6
  Total tax expenditure 29 37 30 27 25 25
Political Contribution Tax Credit4 26 24 20 32 20 21
Culture            
Assistance for artists S S S S S S
Deduction for artists and musicians S S S S S S
Education            
Adult basic education—tax
 deduction for tuition assistance		 5 5 5 5 5 5
Apprentice vehicle mechanics'
 tools deduction		 3 4 3 3 3 3
Education Tax Credit5 220 240 210 220 200 210
Textbook Tax Credit5, 6 – 46 41 42 38 39
Tuition Tax Credit5 265 265 250 270 250 260
Transfer of Education, Textbook
 and Tuition Tax Credits		 445 470 480 485 490 495
Carry-forward of Education,
  Textbook and Tuition Tax Credits7		 365 420 425 430 405 415
Exemption of scholarship, fellowship
 and bursary income8		 11 37 37 38 39 39
Registered Education Savings Plans 145 170 185 165 180 180
Student Loan Interest Credit 55 66 71 74 72 74
Employment            
Canada Employment Credit9 – 470 1,835 1,900 1,905 1,945
Child care expense deduction10 570 740 750 770 755 770
Deduction for income earned by military
 and police deployed to high-risk
 international missions		 18 25 35 36 36 37
Deduction of home relocation loans S S S S S S
Deduction of other employment
 expenses		 890 915 970 1,005 1,005 1,035
Deduction for tradespeople's tool  expenses11 – 4 4 4 4 4
Deduction of union and
 professional dues		 630 660 705 730 720 745
Deferral of salary through leave
 of absence/sabbatical plans		 n.a. n.a. n.a. n.a. n.a. n.a.
Disability supports deduction S S S S S S
Employee benefit plans n.a. n.a. n.a. n.a. n.a. n.a.
Employee stock option deduction12 945 1,085 1,155 755 415 590
Moving expense deduction 100 115 125 130 130 135
Non-taxation of certain non-monetary
 employment benefits		 n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of strike pay n.a. n.a. n.a. n.a. n.a. n.a.
Northern residents deductions13 135 140 150 165 160 160
Overseas Employment Credit14 54 56 64 78 78 80
Tax-free amount for emergency
 service volunteers		 14 14 14 14 14 14
Working Income Tax Benefit15 – – 455 480 1,075 1,125
Family            
Adoption Expense Tax Credit16 3 S 3 3 S S
Caregiver Credit 79 85 84 86 85 87
Child Tax Credit17 – – 1,445 1,475 1,465 1,485
Deferral of capital gains through
 transfers to a spouse, spousal
 trust or family trust		 n.a. n.a. n.a. n.a. n.a. n.a.
Infirm Dependant Credit 5 5 5 5 5 5
Spouse or Common-Law Partner
 Credit18		 1,200 1,205 1,240 1,260 1,365 1,395
Eligible Dependant Credit19 665 675 755 765 785 795
Inclusion of the Universal Child
 Care Benefit in the income
 of an eligible dependant20		 – – – – – 5
Farming and Fishing            
Lifetime capital gains exemption
 for farm and fishing property21		 255 280 385 380 315 325
Cash basis accounting n.a. n.a. n.a. n.a. n.a. n.a.
Deferral of capital gains through
 intergenerational rollovers of
 family farms, family fishing
 businesses and commercial
 woodlots		 n.a. n.a. n.a. n.a. n.a. n.a.
Deferral of income from destruction
 of livestock22		 -10 S S S S S
Deferral of income from sale of
 livestock during drought, flood
 or excessive moisture years23		 n.a. n.a. n.a. n.a. n.a. n.a.
Deferral of income from grain
 sold through cash purchase
 tickets		 -20 10 35 45 -10 -5
Deferral through 10-year capital
 gain reserve		 S S S S S S
Exemption from making quarterly
 tax instalments		 n.a. n.a. n.a. n.a. n.a. n.a.
AgriInvest (farm savings account)24 – – – 20 35 25
Flexibility in inventory accounting n.a. n.a. n.a. n.a. n.a. n.a.
Tax treatment of the Net Income Stabilization Account25            
  Deferral of tax on government
   contributions		 S S S S S –
  Deferral of tax on bonus and
   interest income		 7 S S S S –
  Taxable withdrawals -155 -8 S S S –
Federal-Provincial Financing Arrangements            
Logging Tax Credit S S S S S S
Quebec Abatement 3,405 3,495 3,520 3,605 3,360 3,570
Transfer of income tax points
 to provinces		 15,935 16,995 17,450 17,585 16,420 17,460
General Business and Investment            
$200 capital gains exemption on
 foreign exchange transactions		 n.a. n.a. n.a. n.a. n.a. n.a.
$1,000 capital gains exemption on
 personal-use property		 n.a. n.a. n.a. n.a. n.a. n.a.
Accelerated deduction of capital
 costs		 n.a. n.a. n.a. n.a. n.a. n.a.
Deduction of carrying charges
 incurred to earn income		 895 1,105 1,270 1,200 890 935
Deferral through use of billed-basis
 accounting by professionals		 n.a. n.a. n.a. n.a. n.a. n.a.
Deferral through five-year capital
 gain reserve		 21 25 15 10 10 10
Investment tax credits 15 20 20 20 15 20
Flow-through share deductions26 280 420 420 205 155 215
Mineral Exploration Tax Credit for
 flow-through share investors27		 46 92 150 46 66 120
Reclassification of expenses under
 flow-through shares28		 10 13 -4 -10 -12 -8
Partial inclusion of capital gains29 4,015 5,100 5,740 2,985 2,520 2,795
Taxation of capital gains upon
 realization		 n.a. n.a. n.a. n.a. n.a. n.a.
Tax-Free Savings Account30 – – – – 45 155
Small Business
Lifetime capital gains exemption
 for small business shares31		 430 440 585 610 470 475
Deduction of allowable business
 investment losses		 24 25 20 20 25 25
Deferral through 10-year capital
 gain reserve		 S S S S S S
Labour-Sponsored Venture Capital
 Corporations Credit		 125 125 120 120 125 125
Non-taxation of provincial assistance
 for venture investments in small
 businesses		 n.a. n.a. n.a. n.a. n.a. n.a.
Rollovers of investments in small
 businesses		 6 5 10 10 5 5
Health            
Children's Fitness Tax Credit32 – – 90 105 110 115
Disability Tax Credit 395 430 465 485 465 505
Medical Expense Tax Credit33 805 875 915 1,005 1,010 1,010
Non-taxation of business-paid health
 and dental benefits		 2,170 2,310 2,535 2,705 2,795 2,970
Refundable Medical Expense
 Supplement34		 92 115 110 120 130 135
Income Maintenance and Retirement            
Age Credit35 1,395 1,810 1,810 1,910 2,225 2,310
Deferred Profit-Sharing Plans n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of certain amounts
 received as damages in respect
 of personal injury or death		 14 15 18 19 18 19
Non-taxation of Guaranteed Income
 Supplement and Allowance
 benefits36		 245 180 170 185 89 100
Non-taxation of investment income
 from life insurance policies37		 n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of RCMP
 pensions/compensation
 in respect of injury, disability
 or death		 n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of social assistance
 benefits38		 180 185 145 165 125 135
Non-taxation of up to $10,000
 of death benefits		 n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of veterans'
 allowances, income support
 benefits, civilian war pensions
 and allowances, and other
 service pensions (including
 those from Allied countries)		 3 S S S S S
Non-taxation of veterans' disability
 pensions and support
 for dependants		 145 150 150 150 135 140
Non-taxation of veterans' Disability
 Awards		 – 3 11 19 22 22
Non-taxation of workers' compensation
 benefits		 620 630 655 690 645 670
Registered Disability Savings Plans39 – – – S S S
Pension Income Credit40 420 840 975 995 950 985
Pension income splitting41 – – 840 865 875 920
Registered Pension Plans42            
  Deduction for contributions 8,355 9,830 9,430 9,865 10,385 10,740
  Non-taxation of investment income 11,580 13,080 14,825 6,730 7,640 8,055
  Taxation of withdrawals -7,280 -7,295 -6,790 -7,080 -6,900 -7,175
  Net tax expenditure 12,655 15,615 17,465 9,515 11,125 11,620
Registered Retirement Savings Plans42            
  Deduction for contributions 6,820 7,325 7,405 7,235 7,030 7,280
  Non-taxation of investment income 6,920 7,990 9,110 3,705 4,465 5,020
  Taxation of withdrawals -4,280 -4,620 -5,030 -4,795 -4,810 -4,985
  Net tax expenditure 9,460 10,695 11,485 6,145 6,685 7,315
Supplementary information:
 present-value of tax-assisted
 retirement savings plans43		 8,120 8,850 9,080 9,230 9,430 10,190
Saskatchewan Pension Plan S S S S S S
Treatment of alimony and
 maintenance payments		 97 86 87 92 94 99
U.S. Social Security benefits44 S S S S S 5
Other Items            
Deduction for certain contributions
 by individuals who have taken
 vows of perpetual poverty		 S S S S S S
Deduction for clergy residence 70 75 82 85 84 86
First-Time Home Buyers'
 Tax Credit45		 – – – – 135 145
Home Renovation Tax Credit46 – – – – 2,265 –
Non-taxation of capital gains on
 principal residences47		 3,465 4,325 5,285 3,015 3,735 3,930
Non-taxation of income from the
 Office of the Governor General		 S S S S S S
Non-taxation of income of status
 Indians and Indian bands on
 reserve		 n.a. n.a. n.a. n.a. n.a. n.a.
Special tax computation for certain
 retroactive lump-sum payments		 S S S S S S
Public Transit Tax Credit48 – 45 110 135 140 145
Memorandum Items            
Avoidance of Double Taxation            
Dividend gross-up and credit49 1,730 2,330 3,015 3,505 3,885 3,810
Foreign Tax Credit 655 705 780 780 780 800
Non-taxation of capital dividends n.a. n.a. n.a. n.a. n.a. n.a.
Loss Offset Provisions
Capital loss carry-overs50 305 340 330 125 225 225
Farm and fishing loss carry-overs 15 15 15 15 10 15
Non-capital loss carry-overs 50 50 70 50 50 50
Social and Employment Insurance Programs            
Canada Pension Plan and Quebec Pension Plan            
  Employee-Paid Contribution Credit 2,510 2,665 2,750 2,860 2,880 2,970
  Non-taxation of employer-paid
   premiums		 3,960 4,145 4,445 4,620 4,600 4,760
Employment Insurance and Quebec
 Parental Insurance Plan
  Employee-Paid Contribution Credit51 970 965 945 950 950 995
  Non-taxation of employer-paid
   premiums		 1,995 1,835 1,865 1,870 1,860 1,920
Other            
Basic Personal Amount52 23,410 24,350 26,015 26,370 27,920 28,535
Deferral through capital gains rollovers n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of lottery and gambling
 winnings		 n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of allowances for
 diplomats and other government
 employees posted abroad		 26 27 29 31 33 35
Partial deduction of meals and
 entertainment expenses		 125 125 150 160 170 180

* The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections (available on the Department of Finance website) for a discussion of the reasons for this.

Notes:

1 Unless otherwise indicated in the footnotes, changes in the estimates and projections from those in last year's report, as well as variations from year to year, result from new data and changes in the economic variables affecting the tax expenditures. Changes from last year's report may also reflect the availability of new data sources as well as methodological improvements, in which case the estimates and projections presented in this year's publication may not be comparable to those published in previous reports. In addition, the tax expenditure estimate or projection for a given measure is often affected by changes to other measures. In particular, the introduction or enhancement of broad-based non-refundable tax credits (e.g. the Basic Personal Amount, Age Credit, Pension Income Credit and Child Tax Credit) along with reductions in the lowest personal income tax rate tend to reduce tax expenditure estimates and projections. Further details on the tax expenditures presented in this table are available in the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections.

2 The presentation of this tax expenditure has changed from last year's report. Starting this year, the components of the Charitable Donations Tax Credit associated with donations of publicly listed securities, ecologically sensitive land and cultural property are presented separately (see note 3). The estimates and projections presented on this line reflect the Charitable Donations Tax Credit associated with all other donations. The total tax expenditure for the Charitable Donations Tax Credit would take into account all relevant components.

3 The total tax expenditure cost of donations of these types of assets has two components: the cost of the Charitable Donations Tax Credit and the revenue forgone from the reduced inclusion rate for capital gains (or the non-taxation of capital gains in the case of gifts of cultural property). Budget 2006 reduced the inclusion rate for capital gains on donations of publicly listed securities and ecologically sensitive land from 25% to zero, effective May 2, 2006. Budget 2007 extended this provision to include donations of eligible securities to private foundations, effective March 19, 2007. The components may not add up to the totals due to rounding.

4 The higher levels for this tax expenditure in 2005 and 2006 reflect the fact that contributions in respect of the 39th general election were spread over two calendar years. The tax expenditure is projected to be higher in 2008 as a result of contributions in respect of the 40th general election.

5 These tax expenditures relate to amounts earned and claimed in the year by students (i.e. neither transferred nor carried forward).

6 This measure was introduced in Budget 2006, effective January 1, 2006.

7 For a given year, this tax expenditure represents the value of Education, Textbook and Tuition Tax Credits earned in past years and used in that year. The tax expenditure does not include the pool of unused Education, Textbook and Tuition Tax Credits that have been accumulated but will be deferred for use in future years.

8 Budget 2006 exempted all amounts received for post-secondary scholarships, fellowships and bursaries from tax, effective 2006, where these amounts are received in connection with enrolment in a program for which the student can claim the Education Tax Credit. The maximum exemption for tax years prior to 2006 was $3,000 for these students. Budget 2007 extended this treatment to elementary and secondary school students, effective 2007.

9 This measure was introduced in Budget 2006. Because it was effective in July 2006, the maximum amount on which the credit is calculated for the 2006 taxation year is $250. For 2007, the maximum amount on which the credit is calculated was increased to $1,000. This maximum amount has been indexed for years after 2007.

10 The increase in the tax expenditure in 2006 reflects the phase-out of the Canada Child Tax Benefit under-7 supplement as of June 30, 2006 for children under the age of 6 and June 30, 2007 for 6-year-old children.

11 This measure was introduced in Budget 2006, effective May 2, 2006. The amount of the tax expenditure for this measure has been adjusted downward for all years, reflecting improvements in data and methodology.

12 Projections of this tax expenditure for 2008 and 2009 are based on preliminary tax return information. The significant decline of this tax expenditure in 2008 was followed by an unexpected decline of a similar magnitude in 2009, despite the fact that Canadian equity markets recovered a large part of their losses in the second half of 2009. This measure was changed in Budget 2010, effective March 4, 2010. See the “What's New in the 2010 Report” section for details.

13 Budget 2008 increased the maximum daily residency deduction by 10% from $15 to $16.50, effective 2008.

14 The amount of the tax expenditure for this measure has been adjusted upward for all years, reflecting improvements in data and methodology.

15 This measure was announced in Budget 2007, effective 2007. Budget 2009 enhanced this measure, effective 2009.

16 This measure was introduced in Budget 2005, effective 2005.

17 This measure was introduced in Budget 2007, effective 2007.

18 Budget 2007 and the 2007 Economic Statement enhanced this credit, effective 2007. Budget 2009 enhanced the credit, effective 2009.

19 Budget 2007 and the 2007 Economic Statement enhanced this credit, effective 2007. Budget 2009 enhanced the credit, effective 2009.

20 This measure was introduced in Budget 2010, effective 2010. See the “What's New in the 2010 Report” section for details.

21 Budget 2006 extended the lifetime capital gains exemption (LCGE) to qualifying fishing property, effective May 2, 2006. Budget 2007 announced an increase in the LCGE to $750,000 from $500,000, effective March 19, 2007.

22 Deferred income from 2004 due to the effects of the outbreak of avian flu in British Columbia was reported in 2005, resulting in a negative tax expenditure for that year.

23 This measure was expanded to include prescribed flood or excessive moisture regions on March 5, 2009.

24 This measure was introduced in Budget 2007. This tax expenditure represents the deferral of federal income taxes on interest income accruing in the accounts as well as on government contributions to the accounts, less the amount of federal income taxes payable on withdrawals. The increase of this tax expenditure for 2009 reflects a reduction in the aggregate amount of taxable withdrawals from the accounts.

25 The Net Income Stabilization Account (NISA) and the Canadian Farm Income Program were replaced by the Canadian Agricultural Income Stabilization Program, with the effect that government contributions under NISA ceased as of December 31, 2003. All funds in participant accounts will have been paid out by March 31, 2009. Tax expenditure estimates and projections reflect the wind-down schedule.

26 Estimates and projections reflect a change in methodology from the 2009 report to take into account the tax revenue associated with the incremental gain that arises upon the disposal of a flow-through share as a result of the deemed zero cost base of such shares.

27 The credit was introduced on a temporary basis in 2000 and has been extended since. It is currently set to expire on March 31, 2011. See the “What's New in the 2010 Report” section for details.

28 The tax expenditure is negative for 2007 and subsequent years because the positive tax expenditure associated with new spending in those years is more than offset by the negative tax expenditure resulting from reclassifications that occurred in previous years.

29 Projections for 2008 and 2009 are based on preliminary tax return information. This tax expenditure does not take into account the tax value of current-year capital losses applied against previous-year capital gains.

30 The Tax-Free Savings Account was introduced in Budget 2008, effective January 1, 2009.

31 Budget 2007 announced an increase in the lifetime capital gains exemption to $750,000 from $500,000, effective March 19, 2007.

32 This measure was introduced in Budget 2006, effective 2007. Budget 2007 enhanced this measure for children with disabilities.

33 This measure was changed in Budget 2010, effective after March 4, 2010. See the “What's New in the 2010 Report” section for details.

34 Budget 2005 increased the maximum amount of the supplement from $571 to $750 per year, effective 2005, and Budget 2006 subsequently increased the maximum amount from $767 to $1,000, effective 2006.

35 The Age Credit amount was increased by $1,000, to $5,066 from $4,066, in the Tax Fairness Plan (announced October 31, 2006 and confirmed in Budget 2007), effective January 1, 2006. Budget 2009 increased the amount by $1,000, to $6,408 from $5,408, effective 2009.

36 The decline in this tax expenditure in 2006, 2007 and 2009 is mainly explained by the increase in non-taxpaying seniors due to increases in the Basic Personal Amount and other non-refundable credits relevant to seniors (such as the Age Credit).

37 Although this measure provides tax relief for individuals, it is implemented through the corporate income tax system. Tax expenditure amounts are shown under “investment income credited to life insurance policies” in the corporate income tax table.

38 The decline in this tax expenditure in 2007 generally reflects the increase in non-taxpaying low-income earners due to increases in the Basic Personal Amount and the Eligible Dependant Amount, as well as the introduction of the Child Tax Credit. The decline in 2009 generally reflects the Budget 2009 increase in the Basic Personal Amount and related amounts.

39 This measure was introduced in Budget 2007, effective 2008.

40 Budget 2006 doubled the maximum amount that can be claimed under the Pension Income Credit to $2,000 from $1,000 for the 2006 and subsequent taxation years. The introduction of pension income splitting in 2007 increases the number of individuals claiming the Pension Income Credit and thus increases the value of this tax expenditure (i.e. spouses who previously did not have pension income, and thus could not claim the credit, now receive eligible pension income transferred from their spouse, allowing them to claim the Pension Income Credit).

41 This measure, announced on October 31, 2006 in the Tax Fairness Plan and confirmed in Budget 2007, allows Canadian residents to allocate up to one-half of eligible pension income to their resident spouse or common-law partner, effective 2007. The amount of the tax expenditure for this measure has been adjusted upwards for all years, reflecting improvements in data and methodology.

42 Estimates and projections vary from those in last year's report due to changes in tax rates on contributions and withdrawals and estimated levels of assets, contributions, investment income, capital gains/losses and withdrawals. In general, tax expenditure estimates and projections will be higher in years in which assets grow strongly, reflecting the tax forgone on that investment income, and lower in years in which assets grow slowly or decline.

43 The present-value estimates reflect the lifetime cost of a given year's contributions. This definition is different from that used for the cash-flow estimates and thus the two sets of estimates are not directly comparable. Further information on how these estimates are calculated is contained in the paper “Present-Value Tax Expenditure Estimates of Tax Assistance for Retirement Savings,” which was published in the 2001 edition of this report. The present-value estimates do not reflect the potential effect of Tax-Free Savings Accounts on the average tax rate used to calculate the present value of the forgone tax on investment income.

44 This measure was changed in Budget 2010, effective January 1, 2010. See the “What's New in the 2010 Report” section for details.

45 This measure was introduced in Budget 2009. The projection for 2009 is based on preliminary tax return information.

46 This temporary measure was introduced in Budget 2009 for the 2009 tax year only (for eligible expenses incurred after January 27, 2009 and before February 1, 2010). The projection in this year's publication is based on 2009 tax return information. For reference purposes, the following box summarizes the approach used to make the Budget 2009 projection.

Cost Estimate of the Home Renovation Tax Credit (HRTC)

The cost of the HRTC was estimated at the time of Budget 2009 using the 2006 Survey of Household Spending from Statistics Canada. This survey provides micro-data on consumer spending including expenses on home renovations and alterations.

The 2006 Survey of Household Spending data were adjusted to reflect various factors such as growth in population and average spending projected over the 2006–2009 period. The potential effect of the temporary credit on household renovation spending was also taken into account—i.e. to take advantage of the credit, homeowners may accelerate their planned renovation projects or spend more than originally anticipated.

On the basis of these assumptions, it was estimated that about 4.6 million owner-occupied households would spend more than $1,000 on eligible expenditures over the eligibility period, for a total estimated cost for the Government of about $3 billion. The table below provides additional details on the costing of the credit.

Number of owner-occupied households in 2009a 8.9 million
Number of owner-occupied households spending more than $1,000 on expenses eligible for the HRTCb 4.6 million
Average amount of eligible expenses claimed per householdc $5,500
Average HRTC creditd $650
Total estimated cost for the Governmente $3 billion

a Estimated using the 2006 Survey of Household Spending from Statistics Canada, adjusted to reflect 2006–2009 household growth, using housing starts.

b Estimated using the 2006 spending pattern adjusted to reflect 2006–2009 growth in average spending and the impact of the HRTC on spending behaviour (i.e. stimulus effect).

c After application of the $10,000 limit (i.e. households spending more than $10,000 are considered to have spent $10,000).

d $5,500 minus $1,000 times the credit rate (the credit rate outside Quebec is 15%; the effective credit rate in Quebec is 12.525% as a result of the 16.5% federal abatement).

e Average credit ($650) times number of households (4.6 million).

47 The estimates and projections reflect the cyclicality of the housing market and its impact on the number of residence resales and on the average price of residences. Estimates and projections are based on housing market data and resale forecasts provided by Canada Mortgage and Housing Corporation and the Canadian Real Estate Association. Data on major additions and renovations obtained from Statistics Canada are used to estimate the average amount of capital expenditures on principal residences, which reduces the estimated amount of capital gains.

48 This measure was introduced in Budget 2006, effective July 1, 2006. Budget 2007 extended the credit to electronic fare cards and weekly passes used on an ongoing basis. The amount of the tax expenditure has been adjusted upwards for all years, reflecting improvements in data and methodology.

49 The estimates and projections include the revenue impact associated with both the enhanced Dividend Tax Credit introduced in 2006, mainly applicable to dividends from large businesses, and the basic Dividend Tax Credit applicable to other dividends, mostly from small businesses. Budget 2008 announced reductions in the enhanced Dividend Tax Credit rate and gross-up factor beginning in 2010.

50 This tax expenditure represents the revenue impact resulting from the application of prior years' capital losses against the net capital gains realized in the current year.

51 Estimates and projections include contributions paid to the Quebec Parental Insurance Plan, which took effect January 1, 2006. Effective in 2010, a tax credit is also provided in respect of premiums paid by a self-employed individual under the Employment Insurance Act.

52 The Basic Personal Amount has been increased by amounts over and above the inflation protection provided by full indexation (due to changes in Budget 2005, Budget 2006, the 2007 Economic Statement and Budget 2009).

 

Table 2
Corporate Income Tax Expenditures*
  Estimates1 Projections1
 
  2005 2006 2007 2008 2009 2010
  ($ millions)
Charities, Gifts and Political Contributions            
Deductibility of charitable donations 430 500 430 435 435 405
Donations of publicly listed securities2            
  Deductibility of donations3 n.a. n.a. n.a. n.a. n.a. n.a.
  Reduced inclusion rate for capital gains 18 36 55 106 48 77
  Total tax expenditure n.a. n.a. n.a. n.a. n.a. n.a.
Donations of ecologically sensitive land2            
  Deductibility of donations S 5 S 4 10 7
  Reduced inclusion rate for capital gains S 3 22 3 11 7
  Total tax expenditure S 7 24 7 21 14
Donations of cultural property2            
  Deductibility of donations 17 19 8 5 5 5
  Non-taxation of capital gains n.a. n.a. n.a. n.a. n.a. n.a.
  Total tax expenditure n.a. n.a. n.a. n.a. n.a. n.a.
Deductibility of gifts of medicine – – S S S S
Deductibility of gifts to the Crown S S S S S S
Non-taxation of registered charities n.a. n.a. n.a. n.a. n.a. n.a.
Non-taxation of other non-profit
 organizations (other than registered
 charities)		 135 160 175 125 95 100
Political Contribution Tax Credit4 S S S – – –
Culture            
Canadian Film or Video Production
 Tax Credit		 175 190 210 220 220 220
Non-deductibility of advertising
 expenses in foreign media		 S S S S S S
Federal-Provincial Financing Arrangements            
Income tax exemption for provincial
 and municipal corporations		 n.a. n.a. n.a. n.a. n.a. n.a.
Transfer of income tax points to
 provinces		 1,645 2,045 2,070 1,725 1,950 1,925
Logging Tax Credit 20 20 20 5 4 5
General Business and Investment            
Accelerated deduction of capital
 costs		 n.a. n.a. n.a. n.a. n.a. n.a.
Capital Gains            
Deferal through five-year capital
 gain reserve		 n.a. n.a. n.a. n.a. n.a. n.a.
Partial inclusion of capital gains 4,245 5,845 5,985 4,310 3,030 3,320
Taxation of capital gains upon
 realization		 n.a. n.a. n.a. n.a. n.a. n.a.
Investment Tax Credits            
Atlantic Investment Tax Credit            
  Earned and claimed in current year 135 90 120 65 125 120
  Claimed in current year but earned
   in prior years		 260 75 170 75 165 160
  Earned in current year but carried
   back to prior years		 6 6 3 3 7 7
  Total tax expenditure 401 171 293 143 297 287
Scientific Research and Experimental Development Investment Tax Credit            
  Earned and claimed in current year 2,050 2,135 2,220 2,420 2,310 2,450
  Claimed in current year but earned
   in prior years		 580 590 1,045 900 860 910
  Earned in current year but carried
   back to prior years		 90 90 85 165 110 110
  Total tax expenditure 2,720 2,815 3,350 3,485 3,280 3,470
Apprenticeship Job Creation Tax Credit            
  Earned and claimed in current year – 18 51 67 65 65
  Claimed in current year but earned
   in prior years		 – S 3 10 12 12
  Earned in current year but carried
   back to prior years		 – S 3 5 5 5
  Total tax expenditure – 19 57 82 82 82
Investment Tax Credit for Child
 Care Spaces		 – – S S S S
Small Business            
Deduction of allowable business
 investment losses		 17 10 9 12 11 11
Low tax rate for small businesses5 3,300 3,780 4,650 4,685 4,525 3,920
Non-taxation of provincial assistance
 for venture investments in small
 businesses		 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.
Exemption from tax for international
 banking centres6		 n.a. n.a. n.a. n.a. n.a. n.a.
Exemptions from non-resident withholding tax            
  Dividends7 965 985 1,360 2,070 1,635 1,815
  Interest8 1,575 2,050 1,945 1,585 1,510 1,600
  Rents and royalties 305 235 260 300 290 305
  Management fees 90 100 110 120 115 120
Non-taxation of life insurance companies'
 world income		 n.a. n.a. n.a. n.a. n.a. n.a.
Tax treatment of active business income
 of foreign affiliates of Canadian
 corporations and deductibility of
 expenses incurred to invest in
 foreign affiliates		 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.
Deferral of income from destruction
 of livestock		 S S S S S S
Deferral of income from sale of livestock
 during drought, flood or excessive
 moisture years9		 n.a. n.a. n.a. n.a. n.a. n.a.
Deferral of income from grain sold
 through cash purchase tickets		 17 -8 -25 -28 8 -6
AgriInvest (farm savings account)10 – – – 3 5 5
Flexibility in inventory accounting n.a. n.a. n.a. n.a. n.a. n.a.
Agricultural co-operatives—patronage
 dividends issued as shares		 – 3 3 7 6 6
Exemption for farmers' and fishers'
 insurers		 6 7 4 S 4 4
Natural Resources            
Corporate Mineral Exploration and
 Development Tax Credit		 18 S 18 25 23 24
Deductibility of contributions to a
 qualifying environmental trust		 7 3 S S S S
Earned depletion11 38 51 6 5 6 6
Net impact of the resource allowance
 and the limited deductibility of Crown
 royalties and mining taxes12		 44 17 S – – –
Tax rate on resource income13 -585 -430 -30 – – –
Transitional arrangement for the
 Alberta Royalty Tax Credit14		 S S S – – –
Flow-through share deductions15 160 110 120 70 65 65
Reclassification of expenses under
 flow-through shares16		 4 -5 -3 -4 -3 -2
Other Sectors            
Exemption from branch tax for
 transportation, communications, and
 iron ore mining corporations		 10 S 7 37 13 14
Film or Video Production Services
 Tax Credit		 105 110 95 100 100 100
Low tax rate for credit unions 54 63 71 80 71 61
Surtax on the profits of tobacco
 manufacturers17		 -50 n.a. n.a. n.a. n.a. n.a.
Other Items            
Deductibility of countervailing and
 anti-dumping duties		 n.a. n.a. n.a. n.a. n.a. n.a.
Deductibility of earthquake reserves S S S S S S
Deferral through use of billed-basis
 accounting by professional
 corporations		 n.a. n.a. n.a. n.a. n.a. n.a.
Holdback on progress payments to
 contractors		 30 50 50 50 45 50
Investment income credited to life
 insurance policies		 280 295 280 270 275 260
Tax status of certain federal Crown
 corporations18		 n.a. n.a. n.a. n.a. n.a. n.a.
Memorandum Items            
Avoidance of Double Taxation—Integration of Personal and Corporate Income Tax            
Investment corporation deduction n.a. n.a. n.a. n.a. n.a. n.a.
Refundable capital gains for investment
 and mutual fund corporations		 345 415 430 90 50 52
Refundable taxes on investment income of private corporations
  Additional Part I tax19 -1,495 -1,930 -2,165 -2,410 -2,010 -2,035
  Part IV tax -2,155 -2,550 -3,105 -4,740 -3,660 -3,510
  Dividend refund 4,400 5,345 6,135 8,335 6,930 6,650
  Net tax expenditure 750 865 865 1,185 1,260 1,105
Loss Offset Provisions            
Capital loss carry-overs            
  Net capital losses carried back 84 73 205 535 605 120
  Net capital losses applied to
   current year		 360 640 640 270 220 240
Farm and fishing loss carry-overs            
  Farm and fishing losses carried back 15 14 13 15 17 10
  Farm and fishing losses applied to
   current year		 42 56 42 39 55 36
Non-capital loss carry-overs            
  Non-capital losses carried back 1,775 1,685 2,140 6,145 3,050 1,700
  Non-capital losses applied to
   current year		 4,840 4,535 4,775 3,775 3,810 3,820
Other            
Deferral through capital gains
 rollovers		 n.a. n.a. n.a. n.a. n.a. n.a.
Deduction for intangible assets n.a. n.a. n.a. n.a. n.a. n.a.
Partial deduction of meals and entertainment expenses 300 325 335 290 275 265
Patronage dividend deduction 315 360 470 420 340 325

* The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections (available on the Department of Finance website) for a discussion of the reasons for this.

Notes:

1 Unless otherwise indicated in the footnotes, changes in the estimates and projections from those in last year's report, as well as variations from year to year, result from new data and changes in the economic variables affecting the tax expenditures. Changes from last year's report may also reflect the availability of new data sources as well as methodological improvements, in which case the estimates and projections presented in this year's publication may not be comparable to those published in previous reports. Estimates and projections also reflect the impact of reductions in the general corporate income tax rate from 21% to 19.5% on January 1, 2008, 19.0% on January 1, 2009 and 18.0% on January 1, 2010. The 4% corporate surtax (equivalent to a 1.12% corporate income tax rate) was eliminated on January 1, 2008. Further details on the tax expenditures presented in this table are available in the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections.

2 The total tax expenditure cost of donations of these types of assets has two components: the revenue forgone as a result of the reduced inclusion rate and the cost of the deductibility of charitable donations. Budget 2006 reduced the inclusion rate for capital gains on donations of publicly listed securities and ecologically sensitive land from 25% to zero, effective May 2, 2006. Budget 2007 extended this provision to include donations of eligible securities to private foundations, effective March 19, 2007.

3 There are no data available that allow this tax expenditure to be separated from the “Deductibility of charitable donations” category. Therefore, the value of this tax expenditure is included under “Deductibility of charitable donations.”

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

5 The amount of this tax expenditure reflects the impact of Budget 2006 and Budget 2009, which increased the amount of small business income eligible for the lower tax rate, and Budget 2004, which accelerated the Budget 2003 increase. In addition, Budget 2006 reduced the small business tax rate and the 2007 Economic Statement accelerated the rate reduction. The reduction in the tax expenditure between 2008 and 2010 partly reflects the reduction in the general corporate income rate.

6 For confidentiality reasons, estimates and projections for the 2005 to 2010 period are not published.

7 This category includes the tax expenditure attributable to the exemption of estate and trust income distributions, including distributions by income trusts.

8 Taxpayer information used to estimate this tax expenditure no longer allows for the identification of government debt, which was previously excluded from this tax expenditure. As such, estimates and projections presented in this year's publication are not comparable to those presented in previous years' publications.

9 This measure was expanded to include prescribed flood or excessive moisture regions on March 5, 2009.

10 This measure was introduced in Budget 2007. See footnote 24 in the personal income tax table for further details on this measure.

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

12 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 with a tax year that ends on a date other than December 31, for which the 2007 tax year includes a portion of calendar-year 2006.

13 The tax rate on resource income was reduced to the general corporate income tax rate over a five-year phase-in period beginning in 2003. Although the separate rate for resource income was eliminated as of 2007, there are still revenues in that year associated with companies having a tax year that ends on a date other than December 31, for which the 2007 tax year includes some income earned in calendar-year 2006.

14 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 small costs in that year associated with the related federal transitional measure for companies with off-calendar taxation years, for which the 2007 tax year includes some royalty credits earned in 2006.

15 The estimates and projections reflect a change in methodology from the 2009 report to take into account the tax revenue associated with the incremental gain that arises upon the disposal of a flow-through share as a result of the deemed zero cost base of such shares.

16 The overall tax expenditure is negative for 2006 and subsequent years because the positive tax expenditure associated with new spending in those years is more than offset by the negative tax expenditure resulting from reclassifications that occurred in previous years.

17 For confidentiality reasons, estimates and projections for the 2006 to 2010 period are not published.

18 See the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections for a description of this measure. For confidentiality reasons, estimates and projections for the 2005 to 2010 period are not published.

19 This item includes the additional 6 2/3% refundable tax on investment income as well as the Part I tax paid on investment income in excess of the benchmark rate.

 

Table 3
GST Tax Expenditures*
  Estimates1 Projections1
 
  2005 20062 2007 20082 2009 2010
  ($ millions)
Status Indians and Aboriginal Self-Governements            
Non-taxation of personal property of
 status Indians and Indian bands on
 reserve		 n.a. n.a. n.a. n.a. n.a. n.a.
Refunds for Aboriginal self-governments S 5 5 5 5 5
Business            
Exemption for domestic financial services n.a. n.a. n.a. n.a. n.a. n.a.
Exemption for ferry, road and bridge tolls 15 15 15 10 10 10
Exemption and rebate for legal aid
 services		 25 25 25 25 25 25
Non-taxability of certain importations n.a. n.a. n.a. n.a. n.a. n.a.
Rebate for foreign visitors3 80 70 20 n.a. n.a. n.a.
Rebate for foreign conventions and
 tour packages3		 n.a. n.a. 10 10 10 15
Small suppliers' threshold4 280 275 265 230 220 230
Zero-rating of agricultural and fish
 products and purchases		 S S S S S S
Zero-rating of certain purchases
 made by exporters		 S S S S S S
Charities and Non-Profit Organizations            
Exemption for certain supplies made
 by charities and non-profit
 organizations5		 810 800 805 715 710 740
Rebate for registered charities 295 305 295 255 275 290
Rebate for qualifying non-profit
 organizations		 75 75 70 65 70 75
Education            
Exemption for educational services
 (tuition)		 525 505 495 435 435 455
Rebate for book purchases made by
 qualifying public institutions		 30 30 25 25 25 25
Rebate for colleges 80 80 85 75 85 90
Rebate for schools 425 430 415 360 385 410
Rebate for universities 270 260 240 220 235 250
Health Care            
Exemption for health care services 665 675 685 635 670 700
Rebate for hospitals 515 515 525 480 515 550
Zero-rating of medical devices 185 190 190 165 170 175
Zero-rating of prescription drugs 710 730 740 645 655 685
Households            
Exemption for child care and personal services 155 145 140 120 125 130
GST/HST Credit 3,450 3,510 3,575 3,630 3,720 3,850
Zero-rating of basic groceries 3,905 3,720 3,595 3,160 3,190 3,340
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.
Exemption for residential rent (long-term) 1,445 1,305 1,265 1,115 1,180 1,235
Rebate for new housing 1,010 845 725 670 610 655
Rebate for new residential rental property 55 50 55 50 45 45
Municipalities            
Exemption for municipal transit 165 160 160 145 145 150
Exemption for water and basic garbage collection services 220 230 230 220 220 230
Rebate for municipalities 1,730 1,805 1,805 1,735 1,860 1,985
Memorandum Items            
Recognition of Expenses Incurred to Earn Income            
Rebate to employees and partners 115 100 85 75 75 75
Other            
Partial input tax credits for meals and entertainment expenses4 155 155 150 130 115 120

* The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections (available on the Department of Finance website) for a discussion of the reasons for this.

Notes:

1 Unless otherwise indicated in the footnotes, changes in the estimates and projections from those in last year's report, as well as variations from year to year, result from new data and changes in the economic variables affecting the tax expenditures. Changes from last year's report may also reflect the availability of new data sources as well as methodological improvements, in which case the estimates and projections presented in this year's publication may not be comparable to those published in previous reports. Further details on the tax expenditures presented in this table are available in the 2010 edition of Tax Expenditures: Notes to the Estimates/Projections.

2 The GST rate was lowered from 7% to 6% effective July 1, 2006, and to 5% effective January 1, 2008. These rate reductions have the effect of lowering the cost of tax expenditures starting in 2006 from what they otherwise would have been. This is not true of the GST/HST Credit, however, since it was unaffected by the rate reductions.

3 The Visitors' Rebate Program (VRP) was replaced by the Foreign Convention and Tour Incentive Program effective April 1, 2007. Estimates for the VRP do not include amounts credited by suppliers at the point of sale.

4 The amount of the tax expenditure has been adjusted for all years starting in the 2010 publication, reflecting improvements in methodology.

5 Estimates and projections for this measure appear for the first time because reliable data are now available.

[1] Available on the Department of Finance website.

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