Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2018

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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 2012 to 2019. 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 2012 2013 2014 2015 2016 2017 2018 2019 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 35 40 40 45 30 Tax expenditures Arts and culture Non-structural
3 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
4 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
5 Deferral of income from destruction of livestock CIT S S S 1 S n.a. n.a. n.a. Tax expenditures Business - farming and fishing Structural
6 Deferral of income from destruction of livestock PIT S S S 1 -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 CIT 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 PIT n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Business - farming and fishing Structural
9 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
10 Deferral of income from grain sold through cash purchase tickets CIT 20 -10 -25 20 10 1 n.a. n.a. Tax expenditures Business - farming and fishing Non-structural
11 Deferral of income from grain sold through cash purchase tickets PIT 20 -10 -20 15 10 5 n.a. n.a. Tax expenditures Business - farming and fishing Non-structural
12 Exemption for insurers of farming and fishing property CIT 10 10 10 10 10 10 10 Tax expenditures Business - farming and fishing Non-structural
13 Patronage dividends paid as shares by agricultural cooperatives CIT 4 3 3 S 5 3 3 3 Tax expenditures Business - farming and fishing Non-structural
14 Patronage dividends paid as shares by agricultural cooperatives PIT 2 1 1 S 2 1 1 1 Tax expenditures Business - farming and fishing Non-structural
15 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
16 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
17 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
18 Accelerated capital cost allowance for liquefied natural gas facilities CIT n.a. n.a. n.a. n.a. n.a. Tax expenditures Business - natural resources Non-structural
19 Accelerated capital cost allowance for liquefied natural gas facilities PIT n.a. n.a. n.a. n.a. n.a. Tax expenditures Business - natural resources Non-structural
20 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
21 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
22 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
23 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
24 Corporate Mineral Exploration and Development Tax Credit CIT 20 10 30 15 15 15 15 15 Tax expenditures Business - natural resources Non-structural
25 Earned depletion CIT S S S S S S S S Tax expenditures Business - natural resources Non-structural
26 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
27 Flow-through share deductions CIT 40 25 25 25 30 30 35 30 Tax expenditures Business - natural resources Non-structural
28 Flow-through share deductions PIT 165 100 105 60 100 105 110 100 Tax expenditures Business - natural resources Non-structural
29 Mineral Exploration Tax Credit for flow-through share investors PIT 45 20 30 25 45 45 -10 -3 Tax expenditures Business - natural resources Non-structural
30 Reclassification of expenses under flow-through shares CIT -2 -1 -1 -1 S S S S Tax expenditures Business - natural resources Non-structural
31 Reclassification of expenses under flow-through shares PIT -10 -10 -5 -5 -3 -2 -2 -3 Tax expenditures Business - natural resources Non-structural
32 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
33 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
34 Deductibility of earthquake reserves CIT 1 S S S S 1 1 1 Tax expenditures Business - other Structural
35 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
36 Deferral through five-year capital gain reserve PIT 10 10 10 10 15 15 20 20 Tax expenditures Business - other Structural
37 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
38 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
39 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
40 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
41 Exemption from branch tax for transportation, communications, and iron ore mining corporations CIT 10 10 4 1 S 4 5 5 Tax expenditures Business - other Structural
42 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
43 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
44 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
45 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
46 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
47 Holdback on progress payments to contractors CIT 45 60 80 50 10 15 15 15 Tax expenditures Business - other Structural
48 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
49 Tax status of certain federal Crown corporations CIT X X X X X X X X Tax expenditures Business - other Structural
50 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
51 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
52 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
53 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
54 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
55 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
56 Atlantic Investment Tax Credit PIT 10 10 10 10 10 10 10 10 Tax expenditures Business - other Non-structural
57 Atlantic Investment Tax Credit (non-refundable portion) CIT 270 360 190 260 175 185 190 200 Tax expenditures Business - other Non-structural
58 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
59 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
60 Deferral through 10-year capital gain reserve PIT 30 25 35 25 35 40 40 40 Tax expenditures Business - other Non-structural
61 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
62 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
63 Exemption from tax for international banking centres CIT X X Tax expenditures Business - other Non-structural
64 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
65 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
66 Foreign Convention and Tour Incentive Program GST 15 10 15 20 25 25 15 15 Tax expenditures Business - other Non-structural
67 Lifetime Capital Gains Exemption PIT 1,070 1,100 1,260 1,380 1,365 1,565 1,600 1,615 Tax expenditures Business - other Non-structural
68 Non-deductibility of advertising expenses in foreign media CIT S S S S S S S S Tax expenditures Business - other Non-structural
69 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
70 Special tax rate for credit unions CIT 35 25 20 15 10 1 Tax expenditures Business - other Non-structural
71 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
72 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
73 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
74 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
75 Scientific Research and Experimental Development Investment Tax Credit PIT 4 4 4 4 4 4 4 4 Tax expenditures Business - research and development Non-structural
76 Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion) CIT 1,860 1,900 1,340 1,350 1,415 1,465 1,525 1,580 Tax expenditures Business - research and development Non-structural
77 Small suppliers' threshold GST 205 210 225 230 235 245 260 265 Tax expenditures Business - small businesses Structural
78 Deduction of allowable business investment losses CIT 10 10 10 15 10 15 15 15 Tax expenditures Business - small businesses Non-structural
79 Deduction of allowable business investment losses PIT 40 30 40 35 25 25 25 25 Tax expenditures Business - small businesses Non-structural
80 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
81 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
82 Preferential tax rate for small businesses CIT 3,160 2,945 3,115 3,255 3,760 4,195 5,550 6,325 Tax expenditures Business - small businesses Non-structural
83 Rollovers of investments in small businesses PIT X 5 5 X 35 10 10 10 Tax expenditures Business - small businesses Non-structural
84 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
85 Charitable Donation Tax Credit PIT 2,365 2,545 2,585 2,650 2,605 2,745 2,815 2,885 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
86 Deductibility of charitable donations CIT 425 315 500 450 415 475 465 490 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
87 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
88 Exemption from GST for certain supplies made by charities and non-profit organizations GST 950 990 1,030 1,085 1,150 1,220 1,250 1,250 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
89 First-Time Donor's Super Credit PIT 5 4 4 4 4 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
90 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
91 Non-taxation of capital gains on donations of cultural property PIT 5 5 10 10 10 5 5 5 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
92 Non-taxation of capital gains on donations of ecologically sensitive land CIT 1 1 5 S S 2 1 1 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
93 Non-taxation of capital gains on donations of ecologically sensitive land PIT 2 2 2 1 3 3 3 3 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
94 Non-taxation of capital gains on donations of publicly listed securities CIT 55 70 100 60 75 85 90 95 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
95 Non-taxation of capital gains on donations of publicly listed securities PIT 40 45 70 60 65 70 70 75 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
96 Non-taxation of non-profit organizations PIT/CIT 75 100 105 65 55 85 120 145 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
96 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
97 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
98 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
99 Rebate for qualifying non-profit organizations GST 65 65 70 75 60 65 70 70 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
100 Rebate for registered charities GST 290 290 305 320 295 310 325 335 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
101 Deduction for tuition assistance for adult basic education PIT 3 3 2 1 2 2 2 3 Tax expenditures Education Structural
102 Education Tax Credit PIT 685 705 725 760 765 400 295 245 Tax expenditures Education Structural
103 Textbook Tax Credit PIT 110 115 115 120 120 65 50 40 Tax expenditures Education Structural
104 Tuition Tax Credit PIT 995 1,040 1,120 1,230 1,240 1,340 1,540 1,660 Tax expenditures Education Structural
105 Exemption from GST for tuition and educational services GST 585 595 635 675 690 715 740 770 Tax expenditures Education Non-structural
106 Exemption of scholarship, fellowship and bursary income PIT n.a. 210 250 250 270 340 360 370 Tax expenditures Education Non-structural
107 Rebate for book purchases made by certain organizations GST 20 20 15 15 15 15 15 15 Tax expenditures Education Non-structural
108 Rebate for schools, colleges and universities GST 700 700 710 725 745 785 840 855 Tax expenditures Education Non-structural
109 Registered Education Savings Plans PIT 160 170 155 145 130 115 130 160 Tax expenditures Education Non-structural
110 Student Loan Interest Credit PIT 45 45 40 40 40 40 40 40 Tax expenditures Education Non-structural
111 Apprentice vehicle mechanics' tools deduction PIT 4 4 3 3 3 3 3 3 Tax expenditures Employment Structural
112 Canada Employment Credit PIT 2,040 2,110 2,185 2,270 2,300 2,380 2,445 2,505 Tax expenditures Employment Structural
113 Child care expense deduction PIT 990 965 1,090 1,355 1,265 1,295 1,340 1,385 Tax expenditures Employment Structural
114 Deductibility of certain costs incurred by musicians PIT 1 2 2 1 2 2 2 2 Tax expenditures Employment Structural
115 Deductibility of expenses by employed artists PIT S S S S S S S S Tax expenditures Employment Structural
116 Deduction for tradespeople's tool expenses PIT 2 2 2 2 2 2 2 2 Tax expenditures Employment Structural
117 Deduction of other employment expenses PIT 970 955 920 930 915 960 1,005 1,040 Tax expenditures Employment Structural
118 Deduction of union and professional dues PIT 860 890 915 970 945 985 1,035 1,070 Tax expenditures Employment Structural
119 Moving expense deduction PIT 100 95 100 100 105 110 115 120 Tax expenditures Employment Structural
120 Non-taxation of allowances for diplomats and other government employees posted abroad PIT 25 25 25 25 30 30 n.a. n.a. Tax expenditures Employment Structural
121 Non-taxation of allowances for members of legislative assemblies and certain municipal officers PIT 15 15 20 20 20 20 20 Tax expenditures Employment Structural
122 Non-taxation of benefits in respect of home relocation loans PIT S S S S S S Tax expenditures Employment Structural
123 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
124 Rebate to employees and partners GST 65 65 60 55 55 60 65 65 Tax expenditures Employment Structural
125 Apprenticeship Job Creation Tax Credit CIT 85 90 95 95 95 95 100 100 Tax expenditures Employment Non-structural
126 Apprenticeship Job Creation Tax Credit PIT 2 2 2 2 2 2 2 2 Tax expenditures Employment Non-structural
127 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
128 Employee stock option deduction PIT 590 630 745 685 530 635 690 740 Tax expenditures Employment Non-structural
129 Non-taxation of income earned by military and police deployed to international operational missions PIT 15 15 5 10 10 30 n.a. n.a. Tax expenditures Employment Non-structural
130 Northern Residents Deductions PIT 180 175 180 180 220 225 240 250 Tax expenditures Employment Non-structural
131 Overseas Employment Tax Credit PIT 70 55 40 25 Tax expenditures Employment Non-structural
132 Deductibility of contributions to a qualifying environmental trust CIT -2 S -1 55 55 55 55 55 Tax expenditures Environment Structural
133 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
134 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
135 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
136 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
137 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
138 Public Transit Tax Credit PIT 165 175 180 190 190 100 Tax expenditures Environment Non-structural
139 Adoption Expense Tax Credit PIT 2 2 2 2 2 2 2 2 Tax expenditures Families and households Structural
140 Canada Caregiver Credit PIT 300 310 325 Tax expenditures Families and households Structural
141 Caregiver Credit PIT 120 130 140 145 145 Tax expenditures Families and households Structural
142 Child Tax Credit PIT 1,550 1,590 1,645 Tax expenditures Families and households Structural
143 Eligible Dependant Credit PIT 775 775 795 870 885 930 945 970 Tax expenditures Families and households Structural
144 Family Caregiver Tax Credit PIT 55 65 70 75 75 Tax expenditures Families and households Structural
145 Goods and Services Tax/Harmonized Sales Tax Credit GST 3,995 4,090 4,175 4,315 4,440 4,525 4,585 4,680 Tax expenditures Families and households Structural
146 Infirm Dependant Credit PIT 5 5 5 5 5 Tax expenditures Families and households Structural
147 Spouse or Common-Law Partner Credit PIT 1,635 1,510 1,505 1,440 1,595 1,740 1,790 1,840 Tax expenditures Families and households Structural
148 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
149 Exemption from GST for child care GST 135 145 150 155 160 165 170 180 Tax expenditures Families and households Non-structural
150 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
151 Family Tax Cut PIT 1,550 1,545 Tax expenditures Families and households Non-structural
152 Inclusion of the Universal Child Care Benefit in the income of an eligible dependant PIT 4 2 2 10 5 Tax expenditures Families and households Non-structural
153 Investment Tax Credit for Child Care Spaces CIT S S S S S S S S Tax expenditures Families and households Non-structural
154 Investment Tax Credit for Child Care Spaces PIT S S S S S S S S Tax expenditures Families and households Non-structural
155 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
156 Tax treatment of alimony and maintenance payments PIT 60 65 65 65 75 75 75 75 Tax expenditures Families and households Non-structural
157 Zero-rating of feminine hygiene products GST 15 35 35 35 35 Tax expenditures Families and households Non-structural
158 Disability supports deduction PIT 2 1 3 3 3 3 3 3 Tax expenditures Health Structural
159 Disability Tax Credit PIT 760 815 890 995 1,015 1,045 1,090 1,125 Tax expenditures Health Structural
160 Medical Expense Tax Credit PIT 1,165 1,200 1,300 1,370 1,420 1,525 1,640 1,760 Tax expenditures Health Structural
161 Children's Fitness Tax Credit (before 2015) PIT 115 115 180 Tax expenditures Health Non-structural
162 Exemption from GST for health care services GST 655 725 795 865 880 915 950 990 Tax expenditures Health Non-structural
163 Exemption from GST for hospital parking GST 15 15 15 15 15 15 Tax expenditures Health Non-structural
164 Home Accessibility Tax Credit PIT 20 25 30 35 Tax expenditures Health Non-structural
165 Non-taxation of benefits from private health and dental plans PIT 2,420 2,520 2,585 2,580 2,480 2,585 2,715 2,840 Tax expenditures Health Non-structural
166 Rebate for hospitals, facility operators and external suppliers GST 590 635 650 695 630 665 705 725 Tax expenditures Health Non-structural
167 Rebate for specially equipped motor vehicles GST S S S S S S S S Tax expenditures Health Non-structural
168 Registered Disability Savings Plans PIT 25 30 35 40 50 60 70 85 Tax expenditures Health Non-structural
169 Surtax on the profits of tobacco manufacturers CIT X X X X X X Tax expenditures Health Non-structural
170 Zero-rating of medical and assistive devices GST 330 335 345 350 360 370 380 390 Tax expenditures Health Non-structural
171 Zero-rating of prescription drugs GST 735 755 775 800 835 870 900 935 Tax expenditures Health Non-structural
172 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
173 Exemption from GST for certain residential rent GST 1,695 1,835 2,095 2,345 2,460 2,575 2,705 2,845 Tax expenditures Housing Non-structural
174 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
175 First-Time Home Buyers' Tax Credit PIT 110 105 115 120 115 120 120 120 Tax expenditures Housing Non-structural
176 Non-taxation of capital gains on principal residences PIT 3,900 4,160 5,110 6,195 7,630 7,100 6,225 6,090 Tax expenditures Housing Non-structural
177 Rebate for new housing GST 580 595 570 570 515 535 560 520 Tax expenditures Housing Non-structural
178 Rebate for new residential rental property GST 85 110 125 135 145 140 145 135 Tax expenditures Housing Non-structural
179 Non-taxation of certain veterans' benefits PIT 265 255 240 230 215 210 200 195 Tax expenditures Income support Non-structural
180 Non-taxation of Guaranteed Income Supplement and Allowance benefits PIT 140 140 145 155 185 200 220 240 Tax expenditures Income support Non-structural
181 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
182 Non-taxation of RCMP pensions and other compensation in respect of injury, disability or death PIT 20 20 25 25 30 30 35 35 Tax expenditures Income support Non-structural
183 Non-taxation of social assistance benefits PIT 170 190 205 250 240 250 265 280 Tax expenditures Income support Non-structural
184 Non-taxation of workers' compensation benefits PIT 630 620 645 630 645 650 655 665 Tax expenditures Income support Non-structural
185 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
186 Rebate for municipalities GST 1,995 2,060 2,165 2,240 2,265 2,310 2,290 2,305 Tax expenditures Intergovernmental tax arrangements Structural
187 Refunds for aboriginal self-governments GST 5 5 5 10 5 5 5 5 Tax expenditures Intergovernmental tax arrangements Structural
188 Logging Tax Credit CIT 10 15 20 20 25 25 25 25 Tax expenditures Intergovernmental tax arrangements Non-structural
189 Logging Tax Credit PIT 1 1 1 1 1 1 1 1 Tax expenditures Intergovernmental tax arrangements Non-structural
190 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
191 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
192 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
193 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
194 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
195 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
196 Travellers' exemption GST 215 225 250 270 275 290 295 310 Tax expenditures International Structural
197 Exemptions from non-resident withholding tax PIT/CIT 4,690 5,135 5,280 5,975 5,750 6,065 6,310 6,530 Tax expenditures International Non-structural
198 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
199 Non-taxation of income from the Office of the Governor General of Canada PIT S Tax expenditures Other Structural
200 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
201 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
202 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
203 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
204 Pension Income Credit PIT 1,060 1,100 1,135 1,170 1,185 1,225 1,270 1,310 Tax expenditures Retirement Non-structural
205 Pension income splitting PIT 1,035 1,065 1,145 1,165 1,115 1,225 1,320 1,415 Tax expenditures Retirement Non-structural
206 Pooled Registered Pension Plans PIT n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
207 Registered Pension Plans PIT 18,910 20,840 24,920 24,100 25,270 27,475 28,800 29,970 Tax expenditures Retirement Non-structural
208 Registered Retirement Savings Plans PIT 12,325 13,695 15,950 15,295 15,845 16,815 17,495 18,270 Tax expenditures Retirement Non-structural
209 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
210 $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
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 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
213 Tax treatment of investment income from life insurance policies PIT 275 270 255 220 205 190 200 205 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 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
216 Labour-Sponsored Venture Capital Corporations Credit PIT 150 145 125 90 140 150 155 165 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 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
219 Partial inclusion of capital gains CIT 3,990 4,510 5,365 6,125 6,505 7,300 7,840 8,255 Tax expenditures Savings and investment Non-structural
220 Partial inclusion of capital gains PIT 3,330 4,135 5,610 5,735 5,955 6,920 7,070 7,080 Tax expenditures Savings and investment Non-structural
221 Tax-Free Savings Account PIT 270 425 565 635 845 1,020 1,140 1,280 Tax expenditures Savings and investment Non-structural
222 Age Credit PIT 2,725 2,890 3,025 3,170 3,310 3,475 3,650 3,830 Tax expenditures Social Non-structural
223 Deduction for clergy residence PIT 90 85 90 90 90 95 95 95 Tax expenditures Social Non-structural
224 Exemption from GST and rebate for legal aid services GST 30 30 35 35 35 35 40 40 Tax expenditures Social Non-structural
225 Exemption from GST for ferry, road and bridge tolls GST 10 10 10 15 15 15 15 15 Tax expenditures Social Non-structural
226 Exemption from GST for municipal transit GST 175 185 185 180 185 195 200 205 Tax expenditures Social Non-structural
227 Exemption from GST for water, sewage and basic garbage collection services GST 220 235 240 245 250 260 270 280 Tax expenditures Social Non-structural
228 Political Contribution Tax Credit PIT 25 25 30 55 30 30 30 45 Tax expenditures Social Non-structural
229 Search and Rescue Volunteers Tax Credit PIT 2 2 2 2 2 2 Tax expenditures Social Non-structural
230 Tax-free amount for emergency services volunteers PIT 3 4 3 3 3 4 4 4 Tax expenditures Social Non-structural
231 Volunteer Firefighters Tax Credit PIT 15 15 20 20 20 20 20 20 Tax expenditures Social Non-structural
232 Zero-rating of basic groceries GST 3,765 3,895 4,070 4,230 4,415 4,590 4,760 4,930 Tax expenditures Social Non-structural
233 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
234 Deduction of carrying charges incurred to earn income PIT 1,085 1,190 1,295 1,385 1,400 1,485 1,580 1,655 Tax measures other than tax expenditures Business - other Structural
235 Non-capital loss carry-overs CIT 6,290 7,375 7,150 6,665 6,430 6,750 6,990 7,040 Tax measures other than tax expenditures Business - other Structural
236 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
237 Partial deduction of and partial input tax credits for meals and entertainment CIT 280 270 290 295 310 335 350 360 Tax measures other than tax expenditures Business - other Structural
238 Partial deduction of and partial input tax credits for meals and entertainment GST 160 160 165 170 170 180 185 190 Tax measures other than tax expenditures Business - other Structural
239 Partial deduction of and partial input tax credits for meals and entertainment PIT 195 200 200 215 210 215 215 220 Tax measures other than tax expenditures Business - other Structural
240 Patronage dividend deduction CIT 240 220 220 170 165 180 195 205 Tax measures other than tax expenditures Business - other Structural
241 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
242 Tax treatment of Canada Pension Plan and Quebec Pension Plan contributions and benefits PIT 8,620 8,895 9,270 9,810 9,805 10,110 10,440 11,360 Tax measures other than tax expenditures Employment Structural
243 Tax treatment of Employment Insurance and Quebec Parental Insurance Plan premiums and benefits PIT 3,540 3,800 3,970 4,220 4,185 3,755 3,935 4,070 Tax measures other than tax expenditures Employment Structural
244 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
245 Quebec Abatement PIT 4,040 4,130 4,270 4,440 4,525 4,795 5,005 5,180 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
246 Transfer of income tax points to provinces CIT 2,515 2,655 2,855 2,850 3,120 3,480 3,740 3,940 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
247 Transfer of income tax points to provinces PIT 19,115 20,155 21,120 22,600 22,040 23,600 24,855 25,835 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
248 Foreign tax credit for individuals PIT 860 970 1,205 1,445 1,430 1,475 1,490 1,510 Tax measures other than tax expenditures International Structural
249 Credit for the Basic Personal Amount PIT 30,385 31,535 32,530 33,915 34,380 35,495 36,560 37,615 Tax measures other than tax expenditures Other Structural
250 Non-taxation of veterans' Disability Awards and Critical Injury Benefits PIT 105 115 115 155 170 320 265 240 Tax measures other than tax expenditures Other Structural
251 Refundable taxes on investment income of private corporations CIT 45 5 -735 -355 -1,500 -1,570 -1,695 -1,805 Tax measures other than tax expenditures Other Structural
252 Special tax computation for certain retroactive lump-sum payments PIT S 4 1 1 1 1 1 1 Tax measures other than tax expenditures Other Structural
253 Capital loss carry-overs CIT 545 565 820 875 570 570 610 645 Tax measures other than tax expenditures Savings and investment Structural
254 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
255 Dividend gross-up and tax credit PIT 4,450 5,055 4,655 5,780 4,430 5,085 5,280 5,250 Tax measures other than tax expenditures Savings and investment Structural
256 Investment corporation deduction CIT S S S S S S S S Tax measures other than tax expenditures Savings and investment Structural
257 Refundable capital gains tax for investment and mutual fund corporations CIT 105 220 535 960 850 815 845 880 Tax measures other than tax expenditures Savings and investment Structural
258 Canadian Film or Video Production Tax Credit CIT 260 250 250 260 270 295 310 320 Refundable tax credits classified as transfer payments Arts and culture N/A
259 Atlantic Investment Tax Credit (refundable portion) CIT 15 15 15 20 20 20 20 25 Refundable tax credits classified as transfer payments Business - other N/A
260 Canada Child Benefit PIT 10,265 10,400 10,370 10,510 19,900 23,350 23,625 23,930 Refundable tax credits classified as transfer payments Families and households N/A
261 Children's Fitness Tax Credit (after 2014) PIT 210 140 Refundable tax credits classified as transfer payments Health N/A
262 Film or Video Production Services Tax Credit CIT 85 100 140 150 145 155 160 165 Refundable tax credits classified as transfer payments Arts and culture N/A
263 Refundable Medical Expense Supplement PIT 140 140 145 150 155 160 165 170 Refundable tax credits classified as transfer payments Employment N/A
264 Scientific Research and Experimental Development Investment Tax Credit (refundable portion) CIT 1,455 1,340 1,275 1,290 1,260 1,360 1,395 1,455 Refundable tax credits classified as transfer payments Business - research and development N/A
265 Teacher and Early Childhood Educator School Supply Tax Credit PIT 3 5 5 5 Refundable tax credits classified as transfer payments Employment N/A
266 Working Income Tax Benefit PIT 1,100 1,180 1,165 1,160 1,180 1,180 1,180 1,430 Refundable tax credits classified as transfer payments Employment N/A

Background Statistics

Federal Revenues, Fiscal Year 2016–17
  Revenues (billions of dollars) Share of total
revenues (%)
Share of gross
domestic product (%)
Personal income taxes 143.7 49.0 7.1
Corporate income taxes 42.2 14.4 2.1
Non-resident withholding taxes 7.1 2.4 0.3
Goods and Services Tax 34.4 11.7 1.7
Other excise duties and taxes 17.0 5.8 0.8
 
Total tax revenues 244.3 83.2 12.0
Non-tax revenues 49.2 16.7 2.4
 
Total revenues 293.5 100.0 14.4
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 2017.
Federal Personal Income Tax Brackets and Rates, Tax Filers and Taxes Paid, 2015[1]
  Tax Brackets Tax Filers Taxes Paid
 


  Income range Rate Number
(millions)
Share
(%)
Amount
(billions of dollars)
Share
(%)
  First bracket Under $44,701 15% 8.5 31 15.2 11
  Second bracket $44,701 - $89,401 22% 6.7 25 47.4 35
  Third bracket $89,401 - $138,586 26% 1.5 6 25.3 19
  Fourth bracket Over $138,586 29% 0.8 3 47.7 35
Taxable filers     17.5 65 135.7 100
Non-taxable filers     9.6 36    
All tax filers     27.2 100    
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 2015 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.
Federal Corporate Taxable Income, Number of Corporations and Taxes Paid
(Corporations With Positive Taxable Income), 2015
  Taxable Income Corporations Reporting Income Taxes Paid
 


  Amount (billions of dollars) Share (%) Number (thousands) Share (%) Number (thousands) Share (%)
Canadian-controlled private corporations 164.2 55 905.3 98 21.0 52
  Business income taxed at the preferential tax rate for small businesses 79.5 27 740.4 80
  Other business income taxed at the general rate 62.1 21 93.4 10
  Other income 22.5 8 296.2 32
Other corporations 131.7 45 18.4 2 19.1 48
  Business income taxed at the general rate 127.2 43 18.0 2
  Other income 4.5 2 9.1 1
Total 295.8 100 923.8 100 40.0 100
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 2017 Edition

New tax measures were introduced and others modified since the last edition of this report. Proposed changes affecting tax expenditures in this report are described below. As this report considers tax expenditures as of December 31, 2017, changes announced in Budget 2018 are not listed below or taken into account in the estimates and projections.

Personal Income Tax

Canada Caregiver Credit

The Canada Caregiver Credit was introduced in Budget 2017 and replaced the previous system of credits that included the Caregiver Credit, Infirm Dependant Credit and Family Caregiver Tax Credit, each of which had differing base amounts, dependant income thresholds and eligibility rules. The Canada Caregiver Credit amount is:

  • $6,883 in respect of infirm dependants who are parents, grandparents, brothers, sisters, aunts, uncles, nieces, nephews, or adult children of the claimant or of the claimant’s spouse or common-law partner.
  • $2,150 in respect of:
    • an infirm dependent spouse or common-law partner for whom the individual claims the spouse or common-law partner amount;
    • an infirm dependant for whom the individual claims an eligible dependant credit; or
    • an infirm child who is under the age of 18 years at the end of the tax year.

The Canada Caregiver Credit is reduced dollar-for-dollar by the dependant’s net income above $16,163 (in 2017). Some differences with the previous system of credits are that the dependant is not required to live with the caregiver in order for the caregiver to claim the credit and the credit is not available in respect of non-infirm seniors who reside with their adult children.

Canada Child Benefit

The Canada Child Benefit provides support to families with children under 18 up to a maximum benefit of $6,400 per child under the age of 6 and $5,400 per child aged 6 through 17, for the 2017-18 benefit year. The 2017 Fall Economic Statement announced that the maximum benefit amounts and phase-out thresholds will be indexed to inflation as of the 2018-19 benefit year, rather than as of the 2020-21 benefit year.

Disability Tax Credit

The Disability Tax Credit is a 15% non-refundable tax credit for non-itemizable disability-related costs. To be eligible for the Disability Tax Credit, an individual must have a severe and prolonged impairment in physical or mental functions and the effects of the impairment must be such that the individual is markedly restricted in their ability to perform a basic activity of daily living or would be if not for life sustaining therapy, as certified by an eligible medical practitioner.

Budget 2017 added nurse practitioners to the list of medical practitioners that can certify the impacts of impairments for Disability Tax Credit applicants, effective for Disability Tax Credit certifications made on or after March 22, 2017.

Medical Expense Tax Credit

The Medical Expense Tax Credit is a 15% non-refundable tax credit for certain itemizable, above-average medical or disability-related expenses. Budget 2017 clarified that individuals who require medical intervention in order to conceive a child are eligible to claim the same expenses that would generally be eligible for individuals on account of medical infertility, effective for the 2017 and subsequent taxation years.

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.

On March 5, 2017, the Government announced an extension of the credit for an additional year, to flow-through share agreements entered into on or before March 31, 2018. Under the one-year “look-back” rule, funds raised with the benefit of the credit in 2018, for example, can be spent on eligible exploration up to the end of 2019.

Non-taxation of allowances for members of legislative assemblies and certain municipal officers

Members of legislative assemblies and certain municipal officers may receive non-accountable allowances for work expenses that are not included in computing income for tax purposes. The excluded amount is limited to half of the official’s salary or other remuneration received in that capacity in the year.

Budget 2017 announced that non-accountable allowances paid to these officials will be included in income for 2019 and subsequent taxation years.

Non-taxation of benefits in respect of home relocation loans

Where a person receives a loan because of their employment, and the interest rate on the loan is below a prescribed rate, that person is deemed to have received a taxable benefit. The amount of the taxable benefit is determined by reference to the difference between these two rates.

Prior to 2018, a deduction was available for the value of any portion of the benefit that was in respect of an eligible home relocation loan. Budget 2017 announced the elimination of this deduction in respect of benefits arising in the 2018 and subsequent taxation years.

Non-taxation of capital gains on donations of ecologically sensitive land

A zero inclusion rate applies to capital gains arising from a donation of ecologically sensitive land to a public conservation charity or certain other qualified donees, if the fair market value of the land is certified by the Minister of the Environment. Budget 2017 proposed to remove private foundations as eligible recipients of donations of ecologically sensitive land, and to introduce a number of administrative measures designed to better protect such gifts and to broaden slightly the types of gifts which qualify (i.e., certain personal servitudes in Quebec).

Non-taxation of capital gains on principal residences

The non-taxation of capital gains on principal residences allows homeowners disposing of their principal residence to be exempt from capital gains taxation on the disposition. The exemption is intended for Canadian resident individuals and trusts.

On October 3, 2016, the Government announced amendments to the non-taxation of capital gains on principal residences (often referred to as the principal residence exemption) rules, specifically:

  • An individual who was not resident in Canada in the year the individual acquired a residence will not—on a disposition of the property after October 2, 2016—be able to claim the exemption for the acquisition year;
  • Trusts will be eligible to designate a property as a principal residence for a tax year that begins after 2016 only if certain additional eligibility criteria are met;
  • The Canada Revenue Agency (CRA) will require a taxpayer to report the disposition of a property for which the exemption is claimed; and
  • The CRA was provided with authority to assess taxpayers beyond the normal assessment limitation period for a tax year in cases where the disposition of a real estate property is not reported in the taxpayer’s tax return.
Non-taxation of income earned by military and police deployed to international operational missions

Eligible members of the Canadian Armed Forces (CAF) and police officers may claim a deduction against taxable income in respect of income earned while deployed on international high- and moderate-risk operational missions. The maximum amount that an individual may deduct in a taxation year cannot exceed the highest level of pay earned by a non-commissioned member of the CAF.

On May 18, 2017, the Government announced the extension of the deduction to all members of the CAF and police officers for the period over which they are deployed on any international operational mission, regardless of the risk associated with the mission. In addition, it was announced that the maximum amount that an individual may deduct in a taxation year increased to the highest level of pay earned by a Lieutenant-Colonel (General Services Officer) of the CAF. These changes apply to the 2017 and subsequent taxation years.

Public Transit Tax Credit

Prior to July 1, 2017, a non-refundable tax credit was available at the lowest personal income tax rate for the cost of monthly public transit passes or passes of longer duration. Budget 2017 announced the elimination of this credit, effective for transit use after June 30, 2017.

Tax treatment of Canada Pension Plan and Quebec Pension Plan contributions and benefits

A federal tax credit is provided on employee contributions to the Canada Pension Plan. As part of the 2016 agreement to enhance the Canada Pension Plan, a tax deduction will be provided on employee contributions associated with the enhanced portion of the Canada Pension Plan (contributions to the enhanced portion of the Canada Pension Plan will commence in 2019). A tax credit will continue to apply to employee contributions to the base Canada Pension Plan.

Tuition Tax Credit

The tuition tax credit is a 15% non-refundable tax credit in respect of eligible fees for tuition and licensing examinations paid by an individual enrolled at a post-secondary educational institution or in an educational program intended to develop or improve skills in an occupation offered by an educational institution certified by Employment and Social Development Canada.

Budget 2017 expanded the range of courses eligible for the credit to include occupational skills courses that are undertaken at a post-secondary institution in Canada, and allowed the full amount of bursaries received for such courses to qualify for the scholarship exemption (where conditions are otherwise met). These changes took effect as of the 2017 tax year.

Working Income Tax Benefit

The Working Income Tax Benefit (WITB) is a refundable tax credit that supplements the earnings of low-income workers. The refundable credit is equal to 25% of each dollar of earned income in excess of $3,000 to a maximum credit of $1,043 for single individuals without dependants and $1,894 for families (couples and single parents) in 2017. The WITB is phased out at a rate of 15% of each dollar of adjusted net income above thresholds of $11,838 for single individuals without dependants and $16,348 for families in 2017.

As part of the 2016 agreement to enhance the Canada Pension Plan, the WITB will be enhanced, effective for the 2019 taxation year. The 2017 Fall Economic Statement announced that the WITB will be further enhanced in 2019, over and above changes associated with the Canada Pension Plan enhancement, and that the details of the design of this incremental enhancement will be provided in Budget 2018.

Corporate Income Tax

Accelerated capital cost allowance for clean energy generation equipment

Budget 2017 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 a broader range of geothermal projects and expenses. The measure applies in respect of new property acquired for use after March 21, 2017.

Accelerated deductibility of Canadian Renewable and Conservation Expenses

Budget 2017 expanded the range of geothermal energy project expenses that are eligible as Canadian Renewable and Conservation Expenses, which can be fully deducted in the year incurred. The measure applies in respect of new property acquired for use after March 21, 2017.

Accelerated deductibility of some Canadian Exploration Expenses

Budget 2017 announced modifications to the tax treatment of successful oil and gas exploratory drilling.  Consistent with the usual treatment of enduring assets, expenses incurred after 2018 that are associated with oil and gas discovery wells will be treated as Canadian Development Expenses, which are deducted gradually over time, rather than as an immediate deductible Canadian Exploration Expense (CEE), unless and until they are deemed unsuccessful. CEE treatment will continue to be available for exploration expenses such as early stage geophysical and geochemical surveying, as immediate deductibility is generally an efficient and reasonable tax treatment in these cases.

Additional deduction for gifts of medicine

Budget 2017 announced the elimination of the additional deduction for gifts of medicine made on or after March 22, 2017. This measure allowed corporations that donated medicine from their inventory to an eligible charity to claim an additional deduction equal to the lesser of the cost of the donated medicine and 50% of the amount by which the fair market value of the donated medicine exceeded its cost.

This measure does not affect the general income tax deductibility of donations made by corporations to registered charities, including donations of medicine.

Deferral through use of billed-basis accounting by professionals and professional corporations

In computing income for tax purposes, individuals and corporations carrying on the practice of certain professions (i.e., accounting, legal, medical doctor, dental, chiropractic or veterinary professional practice) can either use an accrual accounting method by default, or elect to use a billed-basis accounting method. Budget 2017 proposed to eliminate the ability of designated professionals to elect to use billed-basis accounting, effective for taxation years that begin on or after March 22, 2017. A five-year transitional period to phase in the inclusion of work in progress into income was subsequently proposed on September 8, 2017.

Exemption for insurers of farming and fishing property

Insurers of farming and fishing property benefit from a tax exemption based upon the proportion of their gross premium income, and that of their affiliated insurers, that is earned from the insurance of property used in farming of fishing (including residences of farmers and fishers). Prescribed insurers are provided preferential access to this tax exemption, by not having to take into account the gross premium income of affiliated insurers when determining their eligibility for the tax exemption.

Budget 2017 announced the elimination of the tax exemption for insurers of farming and fishing property for taxation years that begin after 2018.

Investment Tax Credit for Child Care Spaces

The Investment Tax Credit for Child Care Spaces provided a 25% non-refundable tax credit on costs incurred to build or expand child care spaces in licensed child care facilities. The maximum value of the credit was $10,000 per space created.

Budget 2017 announced the elimination of the Investment Tax Credit for Child Care Spaces in respect of expenditures incurred on or after March 22, 2017. To provide transitional relief, the credit remains available in respect of eligible expenditures incurred before 2020, pursuant to a written agreement entered into before March 22, 2017.

Preferential tax rate for small businesses

The first $500,000 of annual income earned by a Canadian-controlled private corporation from an active business carried on in Canada is generally taxed at a preferential corporate income tax rate. On October 16, 2017, the Government announced that the preferential tax rate would be lowered from 10.5% to 10% as of January 1, 2018, and subsequently to 9% as of January 1, 2019. In order to preserve the integration of the personal and corporate income tax systems, the 2017 Fall Economic Statement announced that the gross-up factor applicable to non-eligible dividends will be adjusted from 17% to 16% effective January 1, 2018, and to 15% effective January 1, 2019. The corresponding Dividend Tax Credit rate will also be adjusted, moving from 10.5% to 10% effective January 1, 2018, and to 9% effective January 1, 2019.

Reclassification of expenses under flow-through shares

Budget 2017 announced that small oil and gas corporations incurring development expenses will no longer be able to reclassify the first $1 million of Canadian Development Expenses as immediately deductible Canadian Exploration Expenses when they are renounced to flow-through share investors. This will generally apply to expenses incurred after 2018.

Surtax on the profits of tobacco manufacturers

Budget 2017 announced the elimination of the surtax on domestic tobacco manufacturers, effective after March 22, 2017. That tax applied at a rate of 10.5% on profits arising from the manufacture of tobacco or tobacco products in Canada. In order to maintain the intended tax burden of the manufacturers’ surtax on tobacco products, Budget 2017 also announced adjustments to tobacco excise duty rates.

Goods and Services Tax

Foreign Convention and Tour Incentive Program

Budget 2017 announced the repeal of the Goods and Services Tax/Harmonized Sales Tax rebate payable to non-resident tourists and tour operators in respect of the accommodation portion of eligible tour packages under the Foreign Convention and Tour Incentive Program. The repeal generally applies in respect of supplies of tour packages or accommodations made after March 22, 2017. As a transitional measure, the rebate was available in respect of a supply of a tour package or accommodations made after March 22, 2017 but before January 1, 2018, if all of the consideration for the supply was paid before January 1, 2018.


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%.

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