Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2017

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Part 2 – Tax Expenditure Estimates and Projections

Introduction

Part 2 presents the estimates of the fiscal cost of federal tax expenditures for the years 2011 to 2018. It presents estimates for a wide range of tax expenditures, measures that are not considered tax expenditures (i.e., measures that are considered part of the benchmark tax system), and refundable tax credits that are classified as transfer payments. The estimates are followed by a second set of tables that present background statistics on total tax revenues by tax base, as well as some other useful statistics, such as the number of filers and tax paid by income tax bracket. Finally, key changes that have been made to tax expenditures since the last edition are described.

Notes:

The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See Part 1 of this report for a discussion of the reasons for this.

A structural measure is one whose main objective is internal to the tax system. The classification of a measure as structural or non-structural is not indicative of the relevance and performance of the measure. A measure could pursue both structural and non-structural objectives, in which case it is categorized based on an assessment of whether the structural or non-structural component predominates (see explanation in the introduction to Part 3 of the report).

Amounts under $500,000 are reported as “S” (“small”), amounts between $500,000 and $5 million are rounded to the nearest $1 million, and amounts above $5 million are rounded to the nearest $5 million.

Symbols:

n.a.
No data available to support a meaningful estimate or projection
Tax expenditure not in effect
X
Not published for confidentiality reasons
PIT
Personal income tax
CIT
Corporate income tax
GST
Goods and Services Tax
Tax Expenditure Estimates and Projections
Default ordering Measure Tax 2011 2012 2013 2014 2015 2016 2017 2018 Group Subject Category
1 Deduction for self-employed artists PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Arts and culture Structural
2 Children’s Arts Tax Credit PIT 30 35 40 40 45 30 Tax expenditures Arts and culture Non-structural
3 Cash basis accounting PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
4 Cash basis accounting CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
5 Deferral of income from destruction of livestock PIT S S S S 1 n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
6 Deferral of income from destruction of livestock CIT S S S S 1 n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
7 Deferral of income from sale of livestock in a region of drought, flood or excessive moisture PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
8 Deferral of income from sale of livestock in a region of drought, flood or excessive moisture CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
9 Flexibility in inventory accounting PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
10 Flexibility in inventory accounting CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Structural
11 Deferral of capital gains through intergenerational rollovers of family farms or fishing businesses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
12 Deferral of income from grain sold through cash purchase tickets PIT 45 20 -10 -20 10 10 n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
13 Deferral of income from grain sold through cash purchase tickets CIT 55 20 -10 -25 15 10 n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
14 Exemption for insurers of farming and fishing property CIT 5 10 10 10 10 10 10 10 Tax expenditures Business – farming and fishing Non-structural
15 Patronage dividends paid as shares by agricultural cooperatives PIT 2 2 1 1 2 2 2 2 Tax expenditures Business – farming and fishing Non-structural
16 Patronage dividends paid as shares by agricultural cooperatives CIT 5 4 3 3 4 4 4 4 Tax expenditures Business – farming and fishing Non-structural
17 Tax treatment of farm savings accounts (AgriInvest and Agri-Québec) PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
18 Tax treatment of farm savings accounts (AgriInvest and Agri-Québec) CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
19 Zero-rating of agricultural and fish products and purchases GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – farming and fishing Non-structural
20 Accelerated capital cost allowance for liquefied natural gas facilities PIT n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
21 Accelerated capital cost allowance for liquefied natural gas facilities CIT n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
22 Accelerated capital cost allowance for mining and oil sands assets PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
23 Accelerated capital cost allowance for mining and oil sands assets CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
24 Accelerated deductibility of some Canadian Exploration Expenses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
25 Accelerated deductibility of some Canadian Exploration Expenses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
26 Corporate Mineral Exploration and Development Tax Credit CIT 70 35 15 30 5 10 10 10 Tax expenditures Business – natural resources Non-structural
27 Earned depletion PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – natural resources Non-structural
28 Earned depletion CIT S S S S S S S S Tax expenditures Business – natural resources Non-structural
29 Flow-through share deductions PIT 240 150 100 100 65 95 100 105 Tax expenditures Business – natural resources Non-structural
30 Flow-through share deductions CIT 65 45 30 30 40 30 30 30 Tax expenditures Business – natural resources Non-structural
31 Mineral Exploration Tax Credit for flow-through share investors PIT 100 45 20 30 30 30 -4 -2 Tax expenditures Business – natural resources Non-structural
32 Reclassification of expenses under flow-through shares PIT -5 -10 -5 -5 -10 -5 -5 -4 Tax expenditures Business – natural resources Non-structural
33 Reclassification of expenses under flow-through shares CIT -2 -2 -1 -1 -1 -1 -1 S Tax expenditures Business – natural resources Non-structural
34 Expensing of current expenditures on scientific research and experimental development PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
35 Expensing of current expenditures on scientific research and experimental development CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
36 Expensing of purchases of capital equipment used for scientific research and experimental development PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
37 Expensing of purchases of capital equipment used for scientific research and experimental development CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – research and development Non-structural
38 Scientific Research and Experimental Development Investment Tax Credit PIT 4 4 3 1 1 1 1 1 Tax expenditures Business – research and development Non-structural
39 Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion for CIT) CIT 1,645 1,845 1,935 1,345 1,360 1,385 1,445 1,500 Tax expenditures Business – research and development Non-structural
40 Small suppliers’ threshold GST 200 205 210 225 225 230 245 255 Tax expenditures Business – small businesses Structural
41 Deduction of allowable business investment losses PIT 35 40 30 40 40 40 40 40 Tax expenditures Business – small businesses Non-structural
42 Deduction of allowable business investment losses CIT 15 10 10 10 15 10 10 10 Tax expenditures Business – small businesses Non-structural
43 Non-taxation of provincial assistance for venture investments in small businesses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – small businesses Non-structural
44 Non-taxation of provincial assistance for venture investments in small businesses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – small businesses Non-structural
45 Preferential tax rate for small businesses CIT 3,850 3,155 2,965 3,115 3,250 3,515 3,625 3,660 Tax expenditures Business – small businesses Non-structural
46 Rollovers of investments in small businesses PIT 4 X 5 5 X 5 10 10 Tax expenditures Business – small businesses Non-structural
47 Deductibility of costs of capital assets and eligibility for investment tax credits before asset is put in use PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
48 Deductibility of costs of capital assets and eligibility for investment tax credits before asset is put in use CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
49 Deductibility of earthquake reserves CIT 1 1 S S S 1 1 1 Tax expenditures Business – other Structural
50 Deferral through five-year capital gain reserve PIT 3 10 10 10 10 20 20 20 Tax expenditures Business – other Structural
51 Deferral through five-year capital gain reserve CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
52 Deferral through rollover of capital gains and capital cost allowance recapture in respect of involuntary dispositions PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
53 Deferral through rollover of capital gains and capital cost allowance recapture in respect of involuntary dispositions CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
54 Deferral through use of billed-basis accounting by professionals and professional corporations PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
55 Deferral through use of billed-basis accounting by professionals and professional corporations CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
56 Exemption from GST for domestic financial services GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
57 Exemption from branch tax for transportation, communications, and iron ore mining corporations CIT 40 10 10 4 1 15 15 15 Tax expenditures Business – other Structural
58 Expensing of advertising costs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
59 Expensing of advertising costs CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
60 Expensing of incorporation expenses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
61 Expensing of incorporation expenses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
62 Holdback on progress payments to contractors PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Structural
63 Holdback on progress payments to contractors CIT 45 45 60 80 55 55 55 60 Tax expenditures Business – other Structural
64 Tax status of certain federal Crown corporations CIT X X X X X X X X Tax expenditures Business – other Structural
65 Accelerated capital cost allowance for computer equipment PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
66 Accelerated capital cost allowance for computer equipment CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
67 Accelerated capital cost allowance for manufacturing or processing machinery and equipment PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
68 Accelerated capital cost allowance for manufacturing or processing machinery and equipment CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
69 Accelerated capital cost allowance for vessels PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
70 Accelerated capital cost allowance for vessels CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
71 Atlantic Investment Tax Credit PIT 10 10 10 10 10 10 10 10 Tax expenditures Business – other Non-structural
72 Atlantic Investment Tax Credit (non-refundable portion for CIT) CIT 120 290 365 190 230 185 175 170 Tax expenditures Business – other Non-structural
73 Deferral for asset transfers to a corporation and corporate reorganizations PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
74 Deferral for asset transfers to a corporation and corporate reorganizations CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
75 Deferral through 10-year capital gain reserve PIT 20 30 25 35 30 45 45 45 Tax expenditures Business – other Non-structural
76 Deferral through rollover of capital gains and capital cost allowance recapture in respect of dispositions of land and buildings PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
77 Deferral through rollover of capital gains and capital cost allowance recapture in respect of dispositions of land and buildings CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
78 Exemption from tax for international banking centres CIT X X X Tax expenditures Business – other Non-structural
79 Expensing of employee training costs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
80 Expensing of employee training costs CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
81 Foreign Convention and Tour Incentive Program GST 15 15 10 15 20 20 20 25 Tax expenditures Business – other Non-structural
82 Lifetime Capital Gains Exemption PIT 985 1,085 1,100 1,260 1,395 1,360 1,450 1,510 Tax expenditures Business – other Non-structural
83 Non-deductibility of advertising expenses in foreign media PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business – other Non-structural
84 Non-deductibility of advertising expenses in foreign media CIT -1 S S S S S S S Tax expenditures Business – other Non-structural
85 Special tax rate for credit unions CIT 55 35 25 20 15 10 1 Tax expenditures Business – other Non-structural
86 Additional deduction for gifts of medicine CIT S S S S S S S S Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
87 Charitable Donation Tax Credit PIT 2,370 2,350 2,525 2,570 2,700 2,850 2,980 3,080 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
88 Deductibility of charitable donations CIT 410 420 315 495 450 495 490 495 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
89 Deduction for certain contributions by individuals who have taken vows of perpetual poverty PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
90 Exemption from GST for certain supplies made by charities and non-profit organizations GST 1,090 950 1,010 1,090 1,160 1,230 1,305 1,335 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
91 First-Time Donor’s Super Credit PIT 5 4 4 4 4 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
92 Non-taxation of capital gains on donations of cultural property PIT 10 5 5 10 10 5 10 10 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
93 Non-taxation of capital gains on donations of cultural property CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
94 Non-taxation of capital gains on donations of ecologically sensitive land PIT 2 2 2 2 1 2 3 2 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
95 Non-taxation of capital gains on donations of ecologically sensitive land CIT 1 1 1 3 S 1 2 1 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
96 Non-taxation of capital gains on donations of publicly listed securities PIT 45 40 45 70 60 70 75 80 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
97 Non-taxation of capital gains on donations of publicly listed securities CIT 65 55 70 100 60 80 85 90 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
98 Non-taxation of non-profit organizations PIT/CIT 125 75 95 95 65 55 75 100 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
99 Non-taxation of registered charities PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
100 Non-taxation of registered charities CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
101 Rebate for poppies and wreaths GST X X X X X X X X Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
102 Rebate for qualifying non-profit organizations GST 70 65 65 70 65 65 70 75 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
103 Rebate for registered charities GST 285 290 290 305 300 305 320 330 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
104 Deduction for tuition assistance for adult basic education PIT 3 3 3 2 2 2 2 2 Tax expenditures Education Structural
105 Education Tax Credit PIT 655 685 705 725 750 770 400 295 Tax expenditures Education Structural
106 Textbook Tax Credit PIT 105 110 115 115 120 125 65 50 Tax expenditures Education Structural
107 Tuition Tax Credit PIT 935 995 1,040 1,120 1,190 1,215 1,360 1,545 Tax expenditures Education Structural
108 Exemption from GST for tuition and educational services GST 545 585 635 670 700 720 750 775 Tax expenditures Education Non-structural
109 Exemption of scholarship, fellowship and bursary income PIT n.a. n.a. 210 220 240 245 295 315 Tax expenditures Education Non-structural
110 Rebate for book purchases made by certain organizations GST 20 20 20 15 15 20 20 20 Tax expenditures Education Non-structural
111 Rebate for schools, colleges and universities GST 740 700 700 710 720 745 750 750 Tax expenditures Education Non-structural
112 Registered Education Savings Plans PIT 170 160 170 155 150 125 110 110 Tax expenditures Education Non-structural
113 Student Loan Interest Credit PIT 40 45 45 40 40 40 40 35 Tax expenditures Education Non-structural
114 Apprentice vehicle mechanics’ tools deduction PIT 4 4 4 3 3 3 4 4 Tax expenditures Employment Structural
115 Canada Employment Credit PIT 1,995 2,040 2,110 2,185 2,240 2,260 2,325 2,380 Tax expenditures Employment Structural
116 Child care expense deduction PIT 925 990 965 1,100 1,360 1,290 1,300 1,335 Tax expenditures Employment Structural
117 Deductibility of certain costs incurred by musicians PIT 1 1 2 2 2 2 2 2 Tax expenditures Employment Structural
118 Deductibility of expenses by employed artists PIT S S S S S S S S Tax expenditures Employment Structural
119 Deduction for tradespeople’s tool expenses PIT 3 2 2 2 2 2 2 2 Tax expenditures Employment Structural
120 Deduction of other employment expenses PIT 955 970 955 920 960 1,000 1,010 1,055 Tax expenditures Employment Structural
121 Deduction of union and professional dues PIT 825 860 890 915 975 985 1,025 1,070 Tax expenditures Employment Structural
122 Moving expense deduction PIT 100 100 95 100 105 110 110 115 Tax expenditures Employment Structural
123 Non-taxation of allowances for diplomats and other government employees posted abroad PIT 45 25 25 25 35 40 n.a. n.a. Tax expenditures Employment Structural
124 Non-taxation of allowances for members of legislative assemblies and certain municipal officers PIT 15 15 15 20 20 20 20 25 Tax expenditures Employment Structural
125 Non-taxation of benefits in respect of home relocation loans PIT S S S S S S S S Tax expenditures Employment Structural
126 Non-taxation of certain non-monetary employment benefits PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Employment Structural
127 Rebate to employees and partners GST 70 65 65 60 65 65 65 70 Tax expenditures Employment Structural
128 Apprenticeship Job Creation Tax Credit PIT 2 2 2 2 2 2 2 2 Tax expenditures Employment Non-structural
129 Apprenticeship Job Creation Tax Credit CIT 70 85 95 95 95 100 100 100 Tax expenditures Employment Non-structural
130 Employee benefit plans PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Employment Non-structural
131 Employee stock option deduction PIT 740 590 630 745 685 695 725 755 Tax expenditures Employment Non-structural
132 Non-taxation of income earned by military and police deployed to international high- and moderate-risk operational missions PIT 35 15 15 5 10 10 n.a. n.a. Tax expenditures Employment Non-structural
133 Northern Residents Deductions PIT 170 180 175 180 180 230 230 235 Tax expenditures Employment Non-structural
134 Overseas Employment Tax Credit PIT 75 70 55 40 20 Tax expenditures Employment Non-structural
135 Deductibility of contributions to a qualifying environmental trust PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Structural
136 Deductibility of contributions to a qualifying environmental trust CIT 5 -2 S -3 55 55 55 55 Tax expenditures Environment Structural
137 Accelerated capital cost allowance for clean energy generation equipment PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
138 Accelerated capital cost allowance for clean energy generation equipment CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
139 Accelerated deductibility of Canadian Renewable and Conservation Expenses PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
140 Accelerated deductibility of Canadian Renewable and Conservation Expenses CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Environment Non-structural
141 Public Transit Tax Credit PIT 160 170 180 180 190 190 200 205 Tax expenditures Environment Non-structural
142 Adoption Expense Tax Credit PIT 3 3 2 2 2 2 2 2 Tax expenditures Families and households Structural
143 Caregiver Credit PIT 110 120 130 140 145 145 150 155 Tax expenditures Families and households Structural
144 Child Tax Credit PIT 1,500 1,545 1,585 1,645 Tax expenditures Families and households Structural
145 Eligible Dependant Credit PIT 785 785 775 795 895 925 940 960 Tax expenditures Families and households Structural
146 Family Caregiver Tax Credit PIT 55 65 65 70 70 70 75 Tax expenditures Families and households Structural
147 Goods and Services Tax/Harmonized Sales Tax Credit GST 3,870 3,995 4,090 4,175 4,315 4,450 4,490 4,595 Tax expenditures Families and households Structural
148 Infirm Dependant Credit PIT 5 5 5 5 5 5 10 10 Tax expenditures Families and households Structural
149 Spouse or Common-Law Partner Credit PIT 1,575 1,635 1,580 1,580 1,500 1,540 1,580 1,620 Tax expenditures Families and households Structural
150 Deferral of capital gains through transfers to a spouse, spousal trust or alter ego trust PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Families and households Non-structural
151 Exemption from GST for child care GST 130 135 145 150 155 160 165 175 Tax expenditures Families and households Non-structural
152 Exemption from GST for personal care services GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Families and households Non-structural
153 Family Tax Cut PIT 1,700 1,715 Tax expenditures Families and households Non-structural
154 Inclusion of the Universal Child Care Benefit in the income of an eligible dependant PIT 2 2 2 2 5 4 Tax expenditures Families and households Non-structural
155 Investment Tax Credit for Child Care Spaces PIT S S S S S S S S Tax expenditures Families and households Non-structural
156 Investment Tax Credit for Child Care Spaces CIT S S S S S S S S Tax expenditures Families and households Non-structural
157 Non-taxation of up to $10,000 of death benefits PIT 5 5 5 5 5 5 5 5 Tax expenditures Families and households Non-structural
158 Tax treatment of alimony and maintenance payments PIT 60 60 65 65 65 75 80 80 Tax expenditures Families and households Non-structural
159 Zero-rating of feminine hygiene products GST 15 35 35 35 Tax expenditures Families and households Non-structural
160 Disability supports deduction PIT 2 2 1 3 3 3 3 4 Tax expenditures Health Structural
161 Disability Tax Credit PIT 685 760 815 890 935 960 995 1,035 Tax expenditures Health Structural
162 Medical Expense Tax Credit PIT 1,135 1,160 1,200 1,300 1,385 1,480 1,595 1,715 Tax expenditures Health Structural
163 Children’s Fitness Tax Credit (before 2015) PIT 110 115 115 180 Tax expenditures Health Non-structural
164 Exemption from GST for health care services GST 610 655 670 705 735 760 790 820 Tax expenditures Health Non-structural
165 Exemption from GST for hospital parking GST 15 15 20 20 20 Tax expenditures Health Non-structural
166 Home Accessibility Tax Credit PIT 40 40 45 Tax expenditures Health Non-structural
167 Non-taxation of benefits from private health and dental plans PIT 2,315 2,420 2,520 2,585 2,650 2,605 2,740 2,865 Tax expenditures Health Non-structural
168 Rebate for hospitals, facility operators and external suppliers GST 620 590 635 650 690 710 720 720 Tax expenditures Health Non-structural
169 Rebate for specially equipped motor vehicles GST S S S S S S S S Tax expenditures Health Non-structural
170 Registered Disability Savings Plans PIT 10 25 30 35 40 55 55 65 Tax expenditures Health Non-structural
171 Surtax on the profits of tobacco manufacturers CIT X X X X X X X X Tax expenditures Health Non-structural
172 Zero-rating of medical and assistive devices GST 325 325 340 360 370 380 385 400 Tax expenditures Health Non-structural
173 Zero-rating of prescription drugs GST 725 735 755 775 785 820 855 885 Tax expenditures Health Non-structural
174 Exemption from GST for sales of used residential housing and other personal-use real property GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Housing Structural
175 Exemption from GST for certain residential rent GST 1,580 1,695 1,655 1,670 1,775 1,865 1,960 2,065 Tax expenditures Housing Non-structural
176 Exemption from GST for short-term accommodation GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Housing Non-structural
177 First-Time Home Buyers’ Tax Credit PIT 110 110 105 115 120 120 120 125 Tax expenditures Housing Non-structural
178 Non-taxation of capital gains on principal residences PIT 4,700 3,900 4,160 5,110 6,195 7,490 6,770 6,615 Tax expenditures Housing Non-structural
179 Rebate for new housing GST 575 580 595 575 575 550 525 505 Tax expenditures Housing Non-structural
180 Rebate for new residential rental property GST 65 85 110 120 120 110 100 100 Tax expenditures Housing Non-structural
181 Non-taxation of certain veterans’ benefits PIT 270 265 255 240 230 215 210 200 Tax expenditures Income support Non-structural
182 Non-taxation of Guaranteed Income Supplement and Allowance benefits PIT 130 140 140 145 155 175 190 210 Tax expenditures Income support Non-structural
183 Non-taxation of investment income on certain amounts received as damages in respect of personal injury or death PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Income support Non-structural
184 Non-taxation of RCMP pensions and other compensation in respect of injury, disability or death PIT 15 20 20 25 25 30 30 30 Tax expenditures Income support Non-structural
185 Non-taxation of social assistance benefits PIT 155 175 180 185 195 205 215 225 Tax expenditures Income support Non-structural
186 Non-taxation of workers’ compensation benefits PIT 610 630 620 645 650 640 660 675 Tax expenditures Income support Non-structural
187 Income tax exemption for certain public bodies CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Intergovernmental tax arrangements Structural
188 Rebate for municipalities GST 2,010 1,995 2,055 2,160 2,220 2,200 2,235 2,285 Tax expenditures Intergovernmental tax arrangements Structural
189 Refunds for aboriginal self-governments GST 5 5 5 5 5 5 5 5 Tax expenditures Intergovernmental tax arrangements Structural
190 Logging Tax Credit PIT 1 1 1 1 1 1 1 1 Tax expenditures Intergovernmental tax arrangements Non-structural
191 Logging Tax Credit CIT 10 10 15 20 20 20 20 25 Tax expenditures Intergovernmental tax arrangements Non-structural
192 Deductibility of countervailing and anti-dumping duties when paid PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
193 Deductibility of countervailing and anti-dumping duties when paid CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
194 Exemption for international shipping and aviation by non-residents PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
195 Exemption for international shipping and aviation by non-residents CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
196 Non-taxation of certain importations GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
197 Non-taxation of life insurance companies’ foreign income CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Structural
198 Travellers’ exemption GST 195 215 230 250 250 250 260 270 Tax expenditures International Structural
199 Exemptions from non-resident withholding tax PIT/CIT 4,075 4,620 4,955 5,215 5,220 5,310 5,540 5,745 Tax expenditures International Non-structural
200 Tax treatment of active business income of foreign affiliates of Canadian corporations and deductibility of expenses incurred to invest in foreign affiliates CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures International Non-structural
201 Deferred Profit-Sharing Plans PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
202 Partial inclusion of U.S. Social Security benefits PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
203 Pension Income Credit PIT 1,035 1,065 1,100 1,140 1,165 1,195 1,235 1,275 Tax expenditures Retirement Non-structural
204 Pension income splitting PIT 975 1,040 1,075 1,150 1,195 1,245 1,340 1,435 Tax expenditures Retirement Non-structural
205 Pooled Registered Pension Plans PIT n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
206 Registered Pension Plans PIT 15,335 18,910 20,840 24,925 24,040 24,850 26,220 27,405 Tax expenditures Retirement Non-structural
207 Registered Retirement Savings Plans PIT 9,735 12,360 13,700 15,960 15,605 15,715 16,275 16,935 Tax expenditures Retirement Non-structural
208 Saskatchewan Pension Plan PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
209 $200 capital gains exemption on foreign exchange transactions PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
210 Capital gains exemption on personal-use property PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
211 Capital gains exemption on personal-use property CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
212 Tax treatment of investment income from life insurance policies PIT 285 275 270 255 220 210 195 200 Tax expenditures Savings and investment Structural
213 Taxation of capital gains upon realization PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
214 Taxation of capital gains upon realization CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Structural
215 Labour-Sponsored Venture Capital Corporations Credit PIT 140 150 145 125 90 150 155 160 Tax expenditures Savings and investment Non-structural
216 Non-taxation of capital dividends PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Non-structural
217 Non-taxation of capital dividends CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Savings and investment Non-structural
218 Partial inclusion of capital gains PIT 3,775 3,310 4,115 5,580 5,755 5,590 6,005 6,265 Tax expenditures Savings and investment Non-structural
219 Partial inclusion of capital gains CIT 3,930 3,925 4,510 5,370 5,890 6,085 6,255 6,490 Tax expenditures Savings and investment Non-structural
220 Tax-Free Savings Account PIT 170 250 410 555 655 885 1,020 1,140 Tax expenditures Savings and investment Non-structural
221 Age Credit PIT 2,530 2,720 2,885 3,025 3,145 3,330 3,465 3,620 Tax expenditures Social Non-structural
222 Deduction for clergy residence PIT 85 90 85 90 95 95 100 100 Tax expenditures Social Non-structural
223 Exemption from GST and rebate for legal aid services GST 30 30 30 35 35 35 35 40 Tax expenditures Social Non-structural
224 Exemption from GST for ferry, road and bridge tolls GST 10 10 10 10 10 10 10 10 Tax expenditures Social Non-structural
225 Exemption from GST for municipal transit GST 170 175 185 190 200 205 215 220 Tax expenditures Social Non-structural
226 Exemption from GST for water, sewage and basic garbage collection services GST 205 210 230 245 255 265 275 285 Tax expenditures Social Non-structural
227 Political Contribution Tax Credit PIT 25 25 25 30 55 35 35 35 Tax expenditures Social Non-structural
228 Search and Rescue Volunteers Tax Credit PIT 2 2 2 2 2 Tax expenditures Social Non-structural
229 Tax-free amount for emergency services volunteers PIT 3 4 3 3 3 3 3 3 Tax expenditures Social Non-structural
230 Volunteer Firefighters Tax Credit PIT 15 15 15 15 15 15 15 15 Tax expenditures Social Non-structural
231 Zero-rating of basic groceries GST 3,645 3,765 3,880 4,060 4,115 4,295 4,460 4,630 Tax expenditures Social Non-structural
232 Non-taxation of income from the Office of the Governor General of Canada PIT S S Tax expenditures Other Structural
233 Non-taxation of personal property of status Indians and Indian bands situated on reserve PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Other Non-structural
234 Non-taxation of personal property of status Indians and Indian bands situated on reserve GST n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Other Non-structural
235 Deduction of carrying charges incurred to earn income PIT 1,105 1,100 1,200 1,305 1,430 1,485 1,550 1,640 Tax measures other than tax expenditures Business – other Structural
236 Deduction of carrying charges incurred to earn income CIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Business – other Structural
237 Non-capital loss carry-overs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Business – other Structural
238 Non-capital loss carry-overs CIT 6,485 6,165 7,185 7,030 6,895 7,010 7,340 7,625 Tax measures other than tax expenditures Business – other Structural
239 Partial deduction of and partial input tax credits for meals and entertainment PIT 180 185 190 190 195 195 200 200 Tax measures other than tax expenditures Business – other Structural
240 Partial deduction of and partial input tax credits for meals and entertainment CIT 280 275 265 290 295 300 295 300 Tax measures other than tax expenditures Business – other Structural
241 Partial deduction of and partial input tax credits for meals and entertainment GST 150 155 160 165 165 175 180 185 Tax measures other than tax expenditures Business – other Structural
242 Patronage dividend deduction CIT 340 240 220 225 180 190 185 190 Tax measures other than tax expenditures Business – other Structural
243 Non-taxation of strike pay PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Employment Structural
244 Tax treatment of Canada Pension Plan and Quebec Pension Plan contributions and benefits PIT 8,250 8,880 9,195 9,625 10,180 10,315 10,670 11,065 Tax measures other than tax expenditures Employment Structural
245 Tax treatment of Employment Insurance and Quebec Parental Insurance Plan premiums and benefits PIT 3,265 3,540 3,805 3,970 4,180 4,210 3,750 3,935 Tax measures other than tax expenditures Employment Structural
246 Non-taxation of lottery and gambling winnings PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
247 Quebec Abatement PIT 3,885 4,040 4,130 4,270 4,615 4,615 4,890 5,110 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
248 Transfer of income tax points to provinces PIT 18,340 19,115 20,155 21,120 22,845 22,830 24,185 25,325 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
249 Transfer of income tax points to provinces CIT 2,440 2,515 2,655 2,855 2,890 3,035 3,020 3,045 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
250 Foreign tax credit for individuals PIT 770 860 970 1,210 1,225 1,235 1,255 1,270 Tax measures other than tax expenditures International Structural
251 Capital loss carry-overs PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax measures other than tax expenditures Savings and investment Structural
252 Capital loss carry-overs CIT 565 535 560 810 870 625 650 670 Tax measures other than tax expenditures Savings and investment Structural
253 Dividend gross-up and tax credit PIT 4,145 4,415 5,025 4,625 5,695 3,560 4,595 4,870 Tax measures other than tax expenditures Savings and investment Structural
254 Investment corporation deduction CIT S S S S S S S S Tax measures other than tax expenditures Savings and investment Structural
255 Refundable capital gains tax for investment and mutual fund corporations CIT 205 110 225 555 1,000 615 640 665 Tax measures other than tax expenditures Savings and investment Structural
256 Credit for the Basic Personal Amount PIT 28,915 30,275 31,495 32,505 33,950 34,690 35,745 36,705 Tax measures other than tax expenditures Other Structural
257 Non-taxation of veterans’ Disability Awards and Critical Injury Benefits PIT 95 105 115 115 155 180 195 210 Tax measures other than tax expenditures Other Structural
258 Refundable taxes on investment income of private corporations CIT 215 55 -20 -740 -395 -605 -695 -730 Tax measures other than tax expenditures Other Structural
259 Special tax computation for certain retroactive lump-sum payments PIT S S 4 1 S S S S Tax measures other than tax expenditures Other Structural
260 Atlantic Investment Tax Credit (refundable portion) CIT 15 15 15 15 20 20 20 20 Refundable tax credits N/A N/A
261 Canada Child Benefit PIT 10,050 10,265 10,400 10,370 10,510 19,900 22,900 22,600 Refundable tax credits N/A N/A
262 Canadian Film or Video Production Tax Credit CIT 225 265 255 255 265 275 300 310 Refundable tax credits N/A N/A
263 Children’s Fitness Tax Credit (after 2014) PIT 210 145 Refundable tax credits N/A N/A
264 Film or Video Production Services Tax Credit CIT 90 90 90 140 145 145 150 155 Refundable tax credits N/A N/A
265 Refundable Medical Expense Supplement PIT 135 140 140 140 145 150 155 160 Refundable tax credits N/A N/A
266 Scientific Research and Experimental Development Investment Tax Credit (refundable portion) CIT 1,495 1,455 1,335 1,290 1,265 1,305 1,350 1,405 Refundable tax credits N/A N/A
267 Teacher and Early Childhood Educator School Supply Tax Credit PIT 25 25 25 Refundable tax credits N/A N/A
268 Working Income Tax Benefit PIT 1,080 1,100 1,180 1,165 1,165 1,165 1,165 1,165 Refundable tax credits N/A N/A

Background Statistics

Table
Federal Revenues, Fiscal Year 2015–16
  Revenues
(billions of dollars)
Share of total
revenues (%)
Share of gross domestic product
(%)
Personal income taxes 144.9 49.0 7.3
Corporate income taxes 41.4 14.0 2.1
Non-resident withholding taxes 6.5 2.2 0.3
Goods and Services Tax 33.0 11.2 1.7
Other excise duties and taxes 16.9 5.7 0.8
 
Total tax revenues 242.7 82.1 12.2
Non-tax revenues 52.8 17.9 2.7
 
Total revenues 295.5 100.0 14.9
Note: Non-tax revenues include revenues from consolidated Crown corporations, net income from enterprise Crown corporations, returns on investments, foreign exchange revenues and proceeds from the sales of goods and services. Totals may not add due to rounding.
Source: Department of Finance Canada, Fall Economic Statement 2016.
Table
Federal Personal Income Tax Brackets and Rates, Tax Filers and Taxes Paid, 2014[1]
  Tax Brackets Tax Filers Taxes Paid
 


  Income range Rate Number
(millions)
Share
(%)
Amount
(billions of dollars)
Share
(%)
  First bracket Under $43,953 15% 8.2 30 14.2 11
  Second bracket $43,953 - $87,907 22% 6.6 25 44.5 35
  Third bracket $87,907 - $136,270 26% 1.5 6 24.6 20
  Fourth bracket Over $136,270 29% 0.8 3 42.7 34
Taxable filers     17.1 64 126.0 100
Non-taxable filers     9.8 36    
All tax filers     26.9 100    
Note: These statistics are presented on a public accounts basis and calculated using the T1 micro-simulation model, which relies on individual tax returns for the 2014 taxation year provided by the Canada Revenue Agency. Taxes paid reflect the total amount of net federal tax reported on line 420 of the Income Tax and Benefit Return. Totals may not add due to rounding.
Source: T1 Income Tax and Benefit Return sample data.
Table
Federal Corporate Taxable Income, Number of Corporations and Taxes Paid
(Corporations With Positive Taxable Income), 2014
  Taxable Income Corporations Reporting Income Taxes Paid
 


  Amount (billions of dollars) Share (%) Number (thousands) Share (%) Amount (billions of dollars) Share (%)
Canadian-controlled private corporations 151.3 51 867.3 98 19.7 49
  Business income taxed at the preferential tax rate for small businesses 76.2 26 713.9 81    
  Other business income taxed at the general rate 55.1 19 85.4 10    
  Other income 20.0 7 275.9 31    
Other corporations 142.6 49 18.0 2 20.8 51
  Business income taxed at the general rate 140.3 48 17.5 2    
  Other income 2.3 1 9.0 1    
Total 293.9 100 885.3 100 40.5 100
Note: The sum of the number of corporations reporting each type of income does not add up to the total number of corporations, as a corporation may report income of more than one type. Totals may not add due to rounding.
Source: T2 Corporation Income Tax Return (Corporation Tax Processing System) data.

Changes to Tax Expenditures Since the 2016 Edition

New tax measures were introduced and others modified since the last edition of this report. In addition to tax measures for which legislation is already in force, this report also considers announced measures that have a coming-into-force date in the 2017 taxation year or earlier, even if the enacting legislation of the measure has not received Royal Assent by the time of production of this report. Changes affecting estimates and projections of tax expenditures are described below.

Personal Income Tax

Canada Child Benefit

To simplify and consolidate the previous system of federal benefits for families with children under the age of 18, while ensuring that help is more generous and better targeted to those who need it most, Budget 2016 introduced the Canada Child Benefit.

Canada Child Benefit payments began in July 2016, replacing the Canada Child Tax Benefit, including the National Child Benefit supplement, and the Universal Child Care Benefit. The Canada Child Benefit provides a maximum benefit of $6,400 per child under the age of 6 and $5,400 per child aged 6 through 17. On the portion of adjusted family net income between $30,000 and $65,000, the benefit is phased out at a rate of 7% for a one-child family, 13.5% for a two-child family, 19% for a three-child family and 23% for larger families. Where adjusted family net income exceeds $65,000, remaining benefits are phased out at rates of 3.2% for a one-child family, 5.7% for a two-child family, 8% for a three-child family and 9.5% for larger families, on the portion of income above $65,000. Indexation to inflation of the maximum benefit amounts and phase-out thresholds is to begin for the 2020–21 benefit year.

Table
Canada Child Benefit Phase-out Rates and Adjusted Family Net Income Thresholds 
Number of children (for phase-out rates) Phase-Out Rates (%)


$30,000 to $65,000 Over $65,000
1 child 7.0 3.2
2 children 13.5 5.7
3 children 19.0 8.0
4 or more children 23.0 9.5

To recognize the additional costs of caring for a child with a severe disability, Budget 2016 continues to provide an additional amount of up to $2,730 per child eligible for the Disability Tax Credit, effective July 1, 2016. The phase-out of this additional amount is made to generally align with the Canada Child Benefit. Specifically, it is phased out at a rate of 3.2% for families with one eligible child and 5.7% for families with more than one eligible child, on adjusted family net income in excess of $65,000. This additional amount is included in the Canada Child Benefit payments made to eligible families.

Entitlement to the Canada Child Benefit for the July 2016 to June 2017 benefit year is based on adjusted family net income for the 2015 taxation year.

Family Tax Cut

A non-refundable income splitting tax credit (referred to in this report as the Family Tax Cut) was available for couples with at least one child under the age of 18. The credit allowed a higher-income spouse or common-law partner to notionally transfer up to $50,000 of taxable income to their spouse or common-law partner for the purpose of reducing the couple’s total income tax liability by up to $2,000.

Budget 2016 eliminated this income splitting tax credit for couples with at least one child under the age of 18 for the 2016 and subsequent taxation years.

Northern Residents Deductions

Individuals who live in prescribed areas in northern Canada for at least six consecutive months beginning or ending in a taxation year may claim the Northern Residents Deductions in computing their taxable income for that year. The amounts that a taxpayer may deduct under the Northern Residents Deductions depend on whether the taxpayer resides in the Northern Zone or the Intermediate Zone. Residents of the Northern Zone are eligible to deduct the full amounts, while residents of the Intermediate Zone may deduct half of the amounts.

Budget 2016 increased the maximum residency deduction that each member of a household may claim from $8.25 to $11 per day and, where no other member of the household claims the residency deduction, from $16.50 to $22 per day for the 2016 taxation year. Residents of the Intermediate Zone will be entitled to deduct half of these increased amounts.

Labour-Sponsored Venture Capital Corporations Credit

Prior to 2015, individuals acquiring shares in a Labour-Sponsored Venture Capital Corporation (LSVCC) qualified for a 15% federal tax credit for investments of up to $5,000 each year. The federal LSVCC tax credit was reduced to 10% for the 2015 taxation year and to 5% for the 2016 taxation year. The credit was scheduled to be eliminated for the 2017 and subsequent taxation years. 

To support provinces that use LSVCC programs, Budget 2016 restored the federal LSVCC tax credit to 15% for share purchases of provincially registered LSVCCs for the 2016 and subsequent taxation years.

Teacher and Early Childhood Educator School Supply Tax Credit

In recognition of costs educators often incur at their own expense for teaching supplies, Budget 2016 introduced a new Teacher and Early Childhood Educator School Supply Tax Credit. This measure will allow an eligible educator to claim a 15% refundable tax credit based on an amount of up to $1,000 in eligible supplies per year. Eligible educators will generally include teachers with a valid teacher’s certificate and early childhood educators with a certificate or diploma in early childhood education. Eligible supplies will include games and puzzles, supplementary books for classrooms, educational support software, and containers (such as plastic boxes or banker boxes for themes and kits), as well as consumable goods, such as construction paper for activities, flashcards or activity centres. This measure will apply to supplies acquired on or after January 1, 2016.

Ontario Electricity Support Program

The Ontario Electricity Support Program (OESP) is a program of the Government of Ontario that, effective January 1, 2016, provides assistance to low-income households in Ontario for the cost of electricity. The OESP reduces the cost of household electricity by providing a monthly credit on a recipient’s electricity bill. The credit depends on household income and how many people live in the household.   

To ensure that income-tested benefits are not reduced as a result of OESP amounts, Budget 2016 exempted from income amounts received under the OESP. This measure will apply to the 2016 and subsequent taxation years. The impact of this change is reflected in the tax expenditure “Non-taxation of social assistance benefits”.

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 generally been extended on an annual basis since then. Budget 2016 announced an extension of the credit for an additional year, to flow-through share agreements entered into on or before March 31, 2017. Under the one-year “look-back” rule, funds raised with the benefit of the credit in 2017, for example, can be spent on eligible exploration up to the end of 2018.

Education and Textbook Tax Credits

To enhance financial assistance for students from low- and middle-income families, Budget 2016 eliminated the Education Tax Credit and Textbook Tax Credit effective January 1, 2017. Unused Education and Textbook Tax Credit amounts carried forward from years prior to 2017 remain available to be claimed in 2017 and subsequent years.

Children’s Fitness and Arts Tax Credits

Budget 2016 announced the phased-out of the Children’s Fitness Tax Credit and Children Arts Tax Credit by reducing the maximum eligible amounts from $1,000 to $500 for the Children’s Fitness Tax Credit and from $500 to $250 for the Children’s Arts Tax Credit in 2016. The supplemental amounts for children eligible for the Disability Tax Credit remain unchanged at $500 in 2016. Both credits and the supplemental amounts are eliminated effective January 1, 2017.

Corporate Income Tax

Preferential Tax Rate for Small Businesses

Small businesses benefit from a reduced income tax rate (relative to the general corporate tax rate of 15%) on their first $500,000 of active business income. The preferential rate was reduced to 10.5% (from 11%) as of 2016 under legislation to enact changes announced in Budget 2015. Budget 2016 announced the deferral of further reductions in the rate. In order to preserve the integration of the personal and corporate income tax systems, Budget 2016 also announced that the current gross-up factor and Dividend Tax Credit rate applicable to non-eligible dividends (generally, dividends distributed from corporate income taxed at the small business rate) would be maintained.

Deduction for Intangible Assets (Eligible Capital Expenditures)

Eligible capital property for income tax purposes includes intangible property such as goodwill and licences, franchises and quotas of indeterminate duration, as well as certain other rights. Budget 2016 announced that the eligible capital property regime will be repealed and will be replaced with a new capital cost allowance class available to businesses, effective January 1, 2017. Accordingly, the eligible capital property regime is no longer presented as a separate measure in this report.

Expensing of Incorporation Expenses

Budget 2016 announced that to reduce compliance burdens in respect of incorporation expenses, a separate business deduction will be provided for these expenditures, such that the first $3,000 of these expenditures will be treated as a current expense rather than being capitalized and depreciated over time. This measure is effective January 1, 2017.

Accelerated Capital Cost Allowance for Clean Energy Generation Equipment

Budget 2016 expanded the accelerated capital cost allowance under classes 43.1 and 43.2, which provide accelerated tax depreciation for clean energy generation and energy conservation equipment, to include certain electric vehicle charging stations and electrical energy storage equipment. These changes apply to property acquired after March 21, 2016.

Canadian Film or Video Production Tax Credit

Talk shows were made eligible for the Canadian Film or Video Production Tax Credit by removing the reference to “talk shows” from the definition of “excluded production” for the purposes of the credit. This change applies to productions for which the principal photography starts after February 16, 2016.


1 Effective for the 2016 and subsequent tax years, the rate applying to the second personal income tax bracket was reduced to 20.5%, and a fifth bracket was added to tax income over $200,000 at a rate of 33%.