Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2019

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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 2013 to 2020. 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 2013 2014 2015 2016 2017 2018 2019 2020 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 40 40 45 25 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 1 -1 2 n.a. n.a. n.a. Tax expenditures Business - farming and fishing Structural
6 Deferral of income from destruction of livestock CIT S S 1 S 3 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 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 PIT -10 -20 15 10 -5 -15 n.a. n.a. Tax expenditures Business - farming and fishing Non-structural
11 Deferral of income from grain sold through cash purchase tickets CIT -10 -25 20 10 -5 -2 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 Tax expenditures Business - farming and fishing Non-structural
13 Patronage dividends paid as shares by agricultural cooperatives PIT 1 1 S 2 2 1 1 1 Tax expenditures Business - farming and fishing Non-structural
14 Patronage dividends paid as shares by agricultural cooperatives CIT 3 3 S 5 4 4 4 4 Tax expenditures Business - farming and fishing Non-structural
15 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
16 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
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 PIT n.a. 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 CIT n.a. 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 PIT 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 CIT 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 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 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
24 Corporate Mineral Exploration and Development Tax Credit CIT -4 30 15 5 50 25 25 25 Tax expenditures Business - natural resources Non-structural
25 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
26 Earned depletion CIT S S S S S S S S Tax expenditures Business - natural resources Non-structural
27 Flow-through share deductions PIT 110 110 70 105 110 115 110 110 Tax expenditures Business - natural resources Non-structural
28 Flow-through share deductions CIT 25 25 25 30 35 35 40 40 Tax expenditures Business - natural resources Non-structural
29 Mineral Exploration Tax Credit for flow-through share investors PIT 20 30 25 50 65 60 65 65 Tax expenditures Business - natural resources Non-structural
30 Reclassification of expenses under flow-through shares PIT -10 -5 -5 -4 -3 -2 -3 -3 Tax expenditures Business - natural resources Non-structural
31 Reclassification of expenses under flow-through shares CIT -1 -1 -1 S S S S S Tax expenditures Business - natural resources Non-structural
32 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
33 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
34 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
35 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
36 Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion for CIT) PIT 3 1 1 S S 1 1 1 Tax expenditures Business - research and development Non-structural
37 Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion for CIT) CIT 1,995 1,315 1,330 1,445 1,510 1,550 1,335 1,375 Tax expenditures Business - research and development Non-structural
38 Small suppliers’ threshold GST 210 220 225 230 245 255 265 275 Tax expenditures Business - small business Structural
39 Deduction of allowable business investment losses PIT 30 40 35 35 20 20 20 20 Tax expenditures Business - small business Non-structural
40 Deduction of allowable business investment losses CIT 10 10 15 10 10 15 15 15 Tax expenditures Business - small business Non-structural
41 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 business Non-structural
42 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 business Non-structural
43 Preferential tax rate for small businesses CIT 2,950 3,105 3,260 3,750 4,020 4,590 5,585 5,575 Tax expenditures Business - small business Non-structural
44 Rollovers of investments in small businesses PIT 5 5 X 25 5 5 5 5 Tax expenditures Business - small business Non-structural
45 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
46 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
47 Deductibility of earthquake reserves CIT S S S S S 1 1 1 Tax expenditures Business - other Structural
48 Deferral through five-year capital gain reserve PIT 10 10 10 15 10 10 10 10 Tax expenditures Business - other Structural
49 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
50 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
51 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
52 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
53 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
54 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
55 Exemption from branch tax for transportation, communications, and iron ore mining corporations CIT 10 4 1 S 35 15 20 20 Tax expenditures Business - other Structural
56 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
57 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
58 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
59 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
60 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
61 Holdback on progress payments to contractors CIT 60 80 50 10 25 30 30 30 Tax expenditures Business - other Structural
62 Tax status of certain federal Crown corporations CIT X X X X X X X X Tax expenditures Business - other Structural
63 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
64 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
65 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
66 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
67 Accelerated Investment Incentive PIT n.a. n.a. n.a. Tax expenditures Business - other Non-structural
68 Accelerated Investment Incentive CIT 375 3,680 3,005 Tax expenditures Business - other Non-structural
69 Atlantic Investment Tax Credit (non-refundable portion for CIT) PIT 10 10 10 10 10 10 10 10 Tax expenditures Business - other Non-structural
70 Atlantic Investment Tax Credit (non-refundable portion for CIT) CIT 320 190 285 135 530 405 170 125 Tax expenditures Business - other Non-structural
71 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
72 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
73 Deferral through 10-year capital gain reserve PIT 30 35 30 30 35 35 35 35 Tax expenditures Business - other Non-structural
74 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
75 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
76 Exemption from tax for international banking centres CIT X Tax expenditures Business - other Non-structural
77 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
78 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
79 Foreign Convention and Tour Incentive Program GST 10 15 20 25 20 10 10 10 Tax expenditures Business - other Non-structural
80 Lifetime Capital Gains Exemption PIT 1,100 1,260 1,380 1,500 1,750 1,660 1,735 1,810 Tax expenditures Business - other Non-structural
81 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
82 Non-deductibility of advertising expenses in foreign media CIT S S S S S S S S Tax expenditures Business - other Non-structural
83 Special tax rate for credit unions CIT 25 20 15 10 S Tax expenditures Business - other 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 2,540 2,585 2,645 2,735 2,905 3,000 3,095 3,190 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
86 Deductibility of charitable donations CIT 320 500 455 455 665 710 710 715 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 990 1,010 1,075 1,175 1,250 1,275 1,275 1,275 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 PIT 5 10 10 10 5 5 5 5 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
91 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
92 Non-taxation of capital gains on donations of ecologically sensitive land PIT 2 2 1 3 2 2 2 2 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
93 Non-taxation of capital gains on donations of ecologically sensitive land CIT 1 5 S S 2 1 1 1 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
94 Non-taxation of capital gains on donations of publicly listed securities PIT 45 70 60 75 90 95 100 105 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
95 Non-taxation of capital gains on donations of publicly listed securities CIT 70 100 60 65 110 85 90 95 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
96 Non-taxation of non-profit organizations PIT/CIT 100 110 70 60 90 120 155 170 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 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
99 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
100 Rebate for qualifying non-profit organizations GST 65 70 75 70 65 70 70 75 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
101 Rebate for registered charities GST 290 310 325 305 295 310 320 335 Tax expenditures Donations, gifts, charities and non-profit organizations Non-structural
102 Deduction for tuition assistance for adult basic education PIT 3 2 1 2 2 2 2 2 Tax expenditures Education Structural
103 Education Tax Credit PIT 705 725 760 730 395 320 250 190 Tax expenditures Education Structural
104 Textbook Tax Credit PIT 115 115 120 115 65 50 40 30 Tax expenditures Education Structural
105 Tuition Tax Credit PIT 1,040 1,120 1,230 1,315 1,450 1,590 1,705 1,810 Tax expenditures Education Structural
106 Exemption from GST for tuition and educational services GST 595 705 755 795 830 870 905 940 Tax expenditures Education Non-structural
107 Exemption of scholarship, fellowship and bursary income PIT 210 250 250 265 365 385 405 425 Tax expenditures Education Non-structural
108 Rebate for book purchases made by certain organizations GST 15 15 15 15 15 15 15 15 Tax expenditures Education Non-structural
109 Rebate for schools, colleges and universities GST 700 710 725 745 825 865 900 930 Tax expenditures Education Non-structural
110 Registered Education Savings Plans PIT 170 155 145 135 120 130 165 220 Tax expenditures Education Non-structural
111 Student Loan Interest Credit PIT 45 40 40 40 45 45 45 45 Tax expenditures Education Non-structural
112 Apprentice vehicle mechanics’ tools deduction PIT 4 3 3 3 3 3 3 3 Tax expenditures Employment Structural
113 Canada Employment Credit PIT 2,110 2,185 2,270 2,295 2,315 2,370 2,440 2,505 Tax expenditures Employment Structural
114 Child care expense deduction PIT 960 1,080 1,345 1,295 1,320 1,365 1,410 1,445 Tax expenditures Employment Structural
115 Deductibility of certain costs incurred by musicians PIT 2 2 1 1 1 1 1 1 Tax expenditures Employment Structural
116 Deductibility of expenses by employed artists PIT S S S S S S S S Tax expenditures Employment Structural
117 Deduction for tradespeople’s tool expenses PIT 2 2 2 2 2 2 2 2 Tax expenditures Employment Structural
118 Deduction of other employment expenses PIT 955 920 930 915 960 1,015 1,050 1,075 Tax expenditures Employment Structural
119 Deduction of union and professional dues PIT 890 915 970 955 990 1,025 1,065 1,100 Tax expenditures Employment Structural
120 Moving expense deduction PIT 95 100 100 100 110 115 120 125 Tax expenditures Employment Structural
121 Non-taxation of allowances for diplomats and other government employees posted abroad PIT 25 25 25 30 30 30 n.a. n.a. Tax expenditures Employment Structural
122 Non-taxation of allowances for members of legislative assemblies and certain municipal officers PIT 15 20 20 20 20 20 Tax expenditures Employment Structural
123 Non-taxation of benefits in respect of home relocation loans PIT S S S S S Tax expenditures Employment Structural
124 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
125 Rebate to employees and partners GST 65 60 55 55 55 60 60 60 Tax expenditures Employment Structural
126 Apprenticeship Job Creation Tax Credit PIT 2 2 2 2 2 2 2 1 Tax expenditures Employment Non-structural
127 Apprenticeship Job Creation Tax Credit CIT 90 90 95 85 90 95 95 100 Tax expenditures Employment Non-structural
128 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
129 Employee stock option deduction PIT 630 745 685 550 630 660 685 710 Tax expenditures Employment Non-structural
130 Non-taxation of income earned by military and police deployed to international operational missions PIT 15 5 10 15 40 35 n.a. n.a. Tax expenditures Employment Non-structural
131 Northern Residents Deductions PIT 175 180 180 220 225 230 235 240 Tax expenditures Employment Non-structural
132 Overseas Employment Tax Credit PIT 55 40 25 Tax expenditures Employment Non-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 Deductibility of contributions to a qualifying environmental trust CIT S -1 55 55 60 60 60 60 Tax expenditures Environment 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 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
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 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
139 Public Transit Tax Credit PIT 175 180 190 190 105 Tax expenditures Environment Non-structural
140 Adoption Expense Tax Credit PIT 2 2 2 2 2 2 2 2 Tax expenditures Families and households Structural
141 Canada Caregiver Credit PIT 225 230 240 245 Tax expenditures Families and households Structural
142 Caregiver Credit PIT 130 140 145 145 Tax expenditures Families and households Structural
143 Child Tax Credit PIT 1,590 1,645 Tax expenditures Families and households Structural
144 Eligible Dependant Credit PIT 775 795 870 905 940 960 995 1,025 Tax expenditures Families and households Structural
145 Family Caregiver Tax Credit PIT 65 70 75 75 Tax expenditures Families and households Structural
146 Goods and Services Tax/Harmonized Sales Tax Credit GST 4,090 4,175 4,315 4,440 4,550 4,690 4,810 4,930 Tax expenditures Families and households Structural
147 Infirm Dependant Credit PIT 5 5 5 5 Tax expenditures Families and households Structural
148 Spouse or Common-Law Partner Credit PIT 1,505 1,505 1,440 1,575 1,740 1,780 1,840 1,895 Tax expenditures Families and households Structural
149 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
150 Exemption from GST for child care GST 145 150 160 165 175 185 190 200 Tax expenditures Families and households Non-structural
151 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
152 Family Tax Cut PIT 1,650 1,625 Tax expenditures Families and households Non-structural
153 Inclusion of the Universal Child Care Benefit in the income of an eligible dependant PIT 2 2 10 5 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 Investment Tax Credit for Child Care Spaces CIT S S S S S S S S Tax expenditures Families and households Non-structural
156 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
157 Tax treatment of alimony and maintenance payments PIT 65 65 65 95 90 95 95 95 Tax expenditures Families and households Non-structural
158 Zero-rating of feminine hygiene products GST 15 35 35 40 40 40 Tax expenditures Families and households Non-structural
159 Disability supports deduction PIT 1 3 3 3 3 3 3 3 Tax expenditures Health Structural
160 Disability Tax Credit PIT 815 885 990 1,030 1,060 1,100 1,145 1,190 Tax expenditures Health Structural
161 Medical Expense Tax Credit PIT 1,200 1,300 1,370 1,435 1,530 1,635 1,745 1,865 Tax expenditures Health Structural
162 Children’s Fitness Tax Credit PIT 115 180 Tax expenditures Health Non-structural
163 Exemption from GST for health care services GST 725 735 765 775 810 860 900 940 Tax expenditures Health Non-structural
164 Exemption from GST for hospital parking GST 10 15 15 15 15 15 15 Tax expenditures Health Non-structural
165 Home Accessibility Tax Credit PIT 15 20 20 25 25 Tax expenditures Health Non-structural
166 Non-taxation of benefits from private health and dental plans PIT 2,520 2,585 2,580 2,480 2,615 2,765 2,910 3,030 Tax expenditures Health Non-structural
167 Rebate for hospitals, facility operators and external suppliers GST 635 650 695 630 665 695 720 745 Tax expenditures Health Non-structural
168 Rebate for specially equipped motor vehicles GST S S S S S S S S Tax expenditures Health Non-structural
169 Registered Disability Savings Plans PIT 30 35 40 50 65 70 80 85 Tax expenditures Health Non-structural
170 Surtax on the profits of tobacco manufacturers CIT X X X X X Tax expenditures Health Non-structural
171 Zero-rating of medical and assistive devices GST 335 360 375 395 405 415 430 440 Tax expenditures Health Non-structural
172 Zero-rating of prescription drugs GST 755 785 820 870 900 935 970 980 Tax expenditures Health Non-structural
173 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
174 Exemption from GST for certain residential rent GST 1,835 1,800 1,895 1,955 2,045 2,160 2,285 2,315 Tax expenditures Housing Non-structural
175 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
176 First-Time Home Buyers’ Tax Credit PIT 105 115 115 115 110 110 110 110 Tax expenditures Housing Non-structural
177 Non-taxation of capital gains on principal residences PIT 4,160 5,100 6,130 7,900 7,565 5,335 5,960 5,915 Tax expenditures Housing Non-structural
178 Rebate for new housing GST 595 570 570 520 510 550 535 525 Tax expenditures Housing Non-structural
179 Rebate for new residential rental property GST 110 125 140 170 130 150 145 145 Tax expenditures Housing Non-structural
180 Non-taxation of certain veterans’ benefits PIT 255 240 230 220 205 195 190 180 Tax expenditures Income support Non-structural
181 Non-taxation of Guaranteed Income Supplement and Allowance benefits PIT 140 145 155 175 200 215 225 235 Tax expenditures Income support Non-structural
182 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
183 Non-taxation of RCMP pensions and other compensation in respect of injury, disability or death PIT 20 25 25 30 35 35 40 40 Tax expenditures Income support Non-structural
184 Non-taxation of social assistance benefits PIT 190 205 230 240 265 285 300 315 Tax expenditures Income support Non-structural
185 Non-taxation of workers’ compensation benefits PIT 620 645 630 640 665 670 675 675 Tax expenditures Income support Non-structural
186 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
187 Rebate for municipalities GST 2,060 2,165 2,245 2,280 2,495 2,595 2,660 2,725 Tax expenditures Intergovernmental tax arrangements Structural
188 Refunds for Indigenous self-governments GST 5 5 10 5 5 5 5 5 Tax expenditures Intergovernmental tax arrangements Structural
189 Logging Tax Credit PIT 1 1 1 1 1 1 1 1 Tax expenditures Intergovernmental tax arrangements Non-structural
190 Logging Tax Credit CIT 15 20 20 25 60 60 60 60 Tax expenditures Intergovernmental tax arrangements Non-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 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
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 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
195 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
196 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
197 Travellers’ exemption GST 225 240 260 260 285 295 310 320 Tax expenditures International Structural
198 Exemptions from non-resident withholding tax PIT/CIT 5,075 5,150 5,585 6,170 6,195 6,450 6,710 6,935 Tax expenditures International Non-structural
199 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
200 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
201 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
202 Pension Income Credit PIT 1,100 1,135 1,170 1,190 1,225 1,265 1,305 1,340 Tax expenditures Retirement Non-structural
203 Pension income splitting PIT 1,065 1,145 1,165 1,135 1,165 1,260 1,355 1,455 Tax expenditures Retirement Non-structural
204 Pooled Registered Pension Plans PIT n.a. n.a. n.a. n.a. n.a. n.a. Tax expenditures Retirement Non-structural
205 Registered Pension Plans PIT 20,590 24,435 24,090 25,830 27,480 27,590 28,950 30,440 Tax expenditures Retirement Non-structural
206 Registered Retirement Savings Plans PIT 13,435 15,700 14,915 15,565 16,800 16,390 16,900 17,515 Tax expenditures Retirement Non-structural
207 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
208 $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
209 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
210 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
211 Tax treatment of investment income from life insurance policies PIT 270 255 220 205 225 230 245 260 Tax expenditures Savings and investment Structural
212 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
213 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
214 Labour-Sponsored Venture Capital Corporations Credit PIT 145 125 90 145 150 155 160 170 Tax expenditures Savings and investment Non-structural
215 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
216 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
217 Partial inclusion of capital gains PIT 4,115 5,580 5,730 6,250 8,575 7,455 7,845 8,250 Tax expenditures Savings and investment Non-structural
218 Partial inclusion of capital gains CIT 4,550 5,395 6,205 6,660 10,005 8,660 8,835 8,965 Tax expenditures Savings and investment Non-structural
219 Tax-Free Savings Account PIT 425 565 635 810 1,030 1,010 1,160 1,315 Tax expenditures Savings and investment Non-structural
220 Age Credit PIT 2,890 3,025 3,170 3,335 3,440 3,620 3,815 4,025 Tax expenditures Social Non-structural
221 Deduction for clergy residence PIT 85 90 90 95 95 100 100 100 Tax expenditures Social Non-structural
222 Exemption from GST and rebate for legal aid services GST 30 35 35 35 35 40 40 40 Tax expenditures Social Non-structural
223 Exemption from GST for ferry, road and bridge tolls GST 10 10 10 10 10 15 15 15 Tax expenditures Social Non-structural
224 Exemption from GST for municipal transit GST 185 190 190 190 200 210 220 225 Tax expenditures Social Non-structural
225 Exemption from GST for water, sewage and basic garbage collection services GST 235 245 260 270 285 295 310 320 Tax expenditures Social Non-structural
226 Political Contribution Tax Credit PIT 25 30 55 25 25 25 45 25 Tax expenditures Social Non-structural
227 Search and Rescue Volunteers Tax Credit PIT 2 2 2 2 2 2 2 Tax expenditures Social Non-structural
228 Tax-free amount for emergency services volunteers PIT 4 3 3 3 3 3 3 3 Tax expenditures Social Non-structural
229 Volunteer Firefighters Tax Credit PIT 15 20 20 20 20 20 20 20 Tax expenditures Social Non-structural
230 Zero-rating of basic groceries GST 3,895 4,080 4,235 4,380 4,550 4,720 4,885 4,950 Tax expenditures Social Non-structural
231 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
232 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
233 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
234 Non-capital loss carry-overs CIT 7,310 7,210 6,715 7,105 7,310 7,830 7,410 7,275 Tax measures other than tax expenditures Business - other Structural
235 Partial deduction of and partial input tax credits for meals and entertainment PIT 200 200 210 215 215 220 225 225 Tax measures other than tax expenditures Business - other Structural
236 Partial deduction of and partial input tax credits for meals and entertainment CIT 275 295 295 310 330 345 320 315 Tax measures other than tax expenditures Business - other Structural
237 Partial deduction of and partial input tax credits for meals and entertainment GST 160 165 170 175 185 190 195 200 Tax measures other than tax expenditures Business - other Structural
238 Patronage dividend deduction CIT 220 220 170 155 195 205 190 190 Tax measures other than tax expenditures Business - other Structural
239 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
240 Tax treatment of Canada Pension Plan and Quebec Pension Plan contributions and benefits PIT 8,895 9,270 9,810 9,610 9,950 10,240 10,655 11,050 Tax measures other than tax expenditures Employment Structural
241 Tax treatment of Employment Insurance and Quebec Parental Insurance Plan premiums and benefits PIT 3,800 3,970 4,220 4,215 3,795 3,960 4,020 4,150 Tax measures other than tax expenditures Employment Structural
242 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
243 Quebec Abatement PIT 4,130 4,270 4,440 4,480 4,755 5,055 5,270 5,455 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
244 Transfer of income tax points to provinces PIT 20,155 21,120 22,600 21,875 23,500 25,050 26,200 27,245 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
245 Transfer of income tax points to provinces CIT 2,655 2,855 2,850 3,000 3,295 3,505 3,665 3,720 Tax measures other than tax expenditures Intergovernmental tax arrangements Structural
246 Foreign tax credit for individuals PIT 970 1,205 1,445 1,590 1,600 1,620 1,640 1,660 Tax measures other than tax expenditures International Structural
247 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
248 Capital loss carry-overs CIT 640 795 840 600 565 660 665 670 Tax measures other than tax expenditures Savings and investment Structural
249 Deduction of interest and carrying charges incurred to earn investment income PIT 1,190 1,295 1,385 1,455 1,645 1,745 1,840 1,925 Tax measures other than tax expenditures Savings and investment Structural
250 Deduction of interest and carrying charges incurred to earn investment income CIT 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
251 Dividend gross-up and tax credit PIT 5,055 4,655 5,780 4,475 5,345 5,415 5,340 5,650 Tax measures other than tax expenditures Savings and investment Structural
252 Investment corporation deduction CIT S S S S S S S S Tax measures other than tax expenditures Savings and investment Structural
253 Refundable capital gains tax for investment and mutual fund corporations CIT 220 535 960 855 1,230 975 1,040 1,040 Tax measures other than tax expenditures Savings and investment Structural
254 Credit for the Basic Personal Amount PIT 31,055 32,010 33,345 33,910 34,975 35,955 37,185 38,410 Tax measures other than tax expenditures Other Structural
255 Non-taxation of payments to Canadian Armed Forces members and veterans in respect of pain and suffering PIT 115 115 155 170 345 345 250 170 Tax measures other than tax expenditures Other Structural
256 Refundable taxes on investment income of private corporations CIT 1 -720 -350 -1,290 -1,925 -2,030 -2,090 -2,180 Tax measures other than tax expenditures Other Structural
257 Special tax computation for certain retroactive lump-sum payments PIT 4 1 1 1 1 1 1 1 Tax measures other than tax expenditures Other Structural
258 Atlantic Investment Tax Credit (refundable portion) CIT 15 15 20 20 20 25 25 25 Refundable tax credits classified as transfer payments Business - other N/A
259 Canada Child Tax Benefit PIT 10,400 10,370 10,510 3,240 Refundable tax credits classified as transfer payments Families and households N/A
260 Canada Child Benefit PIT 16,860 23,420 23,900 24,200 24,700 Refundable tax credits classified as transfer payments Families and households N/A
261 Canadian Film or Video Production Tax Credit CIT 250 255 265 280 305 320 330 340 Refundable tax credits classified as transfer payments Arts and culture N/A
262 Children’s Fitness Tax Credit PIT 210 145 Refundable tax credits classified as transfer payments Health N/A
263 Film or Video Production Services Tax Credit CIT 90 135 155 220 270 285 295 305 Refundable tax credits classified as transfer payments Arts and culture N/A
264 Refundable Medical Expense Supplement PIT 140 145 150 155 160 165 170 175 Refundable tax credits classified as transfer payments Employment N/A
265 Scientific Research and Experimental Development Investment Tax Credit (refundable portion) CIT 1,345 1,275 1,280 1,280 1,275 1,365 1,400 1,460 Refundable tax credits classified as transfer payments Business - research and development N/A
266 Teacher and Early Childhood Educator School Supply Tax Credit PIT 3 4 5 5 5 Refundable tax credits classified as transfer payments Employment N/A
267 Working Income Tax Benefit PIT 1,180 1,165 1,160 1,185 1,160 1,160 - - Refundable tax credits classified as transfer payments Employment N/A
268 Canada Workers Benefit PIT 2,100 2,100 Refundable tax credits classified as transfer payments Employment N/A

Background Statistics

Federal Revenues, Fiscal Year 2017–18
  Revenues
(billions of dollars)
Share of total
revenues (%)
Share of gross
domestic product (%)
Personal income taxes 153.6 49.0 7.2
Corporate income taxes 47.8 15.2 2.2
Non-resident withholding taxes 7.8 2.5 0.4
Goods and Services Tax 36.8 11.7 1.7
Other excise duties and taxes 17.1 5.5 0.8

Total tax revenues 263.1 83.9 12.3
Non-tax revenues 50.5 16.1 2.4

Total revenues 313.6 100.0 14.7
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 2018.
Federal Personal Income Tax Brackets and Rates, Tax Filers and Taxes Paid, 2016
  Tax Brackets Tax Filers Taxes Paid



  Income range Rate Number
(millions)
Share
(%)
Amount
(billions of dollars)
Share
(%)
First bracket Under $45,282 15% 8.5 31 15.7 12
Second bracket $45,282 - $90,563 20.5% 6.8 25 47.0 36
Third bracket $90,563 - $140,388 26% 1.5 5 24.4 19
Fourth bracket $140,388 - $200,000 29% 0.4 2 12.1 9
Fifth bracket Over $200,000 33% 0.3 1 30.8 24
Taxable filers     17.5 64 130.0 100
Non-taxable filers     9.9 36    
All tax filers     27.4 100    
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 2016 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), 2016
  Taxable Income Corporations Reporting Income Taxes Paid



  Amount
(billions of dollars)
Share
(%)
Number
(thousands)
Share
(%)
Amount
(billions of dollars)
Share
(%)
Canadian-controlled private corporations 174.2 55 937.9 98 22.4 53
Business income taxed at the preferential tax rate for small businesses 81.8 26 740.4 80    
Other business income taxed at the general rate 69.4 22 104.4 11    
Other income 23.0 7 310.1 32    
Other corporations 141.0 45 19.7 2 20.2 47
Business income taxed at the general rate 137.1 43 19.3 2    
Other income 3.8 1 9.5 1    
Total 315.2 100 957.6 100 42.6 100
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 2018 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, 2018, changes announced in Budget 2019 are not listed below or taken into account in the estimates and projections.

Personal Income Tax

Canada Workers Benefit

The Working Income Tax Benefit (WITB) is a refundable tax credit that supplements the earnings of low-income workers. Budget 2018 introduced the new Canada Workers Benefit (CWB), which will replace the WITB beginning in 2019. The CWB is a more generous and more accessible benefit that will supplement the earnings of low-income workers and encourage more people to join or stay in the workforce. The maximum benefit under the CWB will be increased by up to $170 relative to the WITB, and the income level at which the benefit is phased out completely will also be higher. The enhanced benefit will equal 26% of each dollar of earned income in excess of $3,000 to a maximum credit of $1,355 for single individuals without dependants and $2,335 for families (couples and single parents) in 2019. The CWB will be phased out at a rate of 12% of each dollar of adjusted net income above thresholds of $12,820 for single individuals without dependants and $17,025 for families in 2019. In addition, enhancements to the new CWB will ensure that all tax filers eligible for the benefit will receive it, even if they do not claim it.

Child Benefits

Indexation of the Canada Child Benefit

As of July 2018, the maximum benefit amounts and phase-out thresholds of the Canada Child Benefit, which provides support to families with children under 18, are indexed to inflation. As a result, the maximum benefit amounts provided under the Canada Child Benefit were increased to $6,496 from $6,400 per child under the age of 6, and to $5,481 from $5,400 per child aged 6 through 17, for the 2018-19 benefit year.

Retroactive Eligibility of Foreign-Born Status Indians

Budget 2016 established eligibility for the Canada Child Benefit to include foreign-born status Indians residing legally in Canada who are neither Canadian citizens nor permanent residents, where all other eligibility requirements are met, consistent with other federal benefits. These individuals were not eligible under the previous system of child benefits. As of July 2018, such individuals are retroactively eligible for the Canada Child Tax Benefit, the National Child Benefit supplement and the Universal Child Care Benefit, where all other eligibility requirements are met.

This measure applies from the 2005 taxation year to June 30, 2016.

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 2018 announced an expansion of the credit to recognize costs incurred in respect of an animal specifically trained to perform tasks for a patient with a severe mental impairment in order to assist them in coping with their impairment (e.g., a psychiatric service dog trained to assist with post-traumatic stress disorder).

This measure applies in respect of eligible expenses incurred after 2017.

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 2018 announced an extension of the credit for an additional year, to flow-through share agreements entered into on or before March 31, 2019. Subsequently, as part of the 2018 Fall Economic Statement, the Government announced its intention to extend the credit for an additional five years, until March 31, 2024. Under the one-year "look-back" rule, funds raised with the benefit of the credit in 2024, for example, can be spent on eligible exploration up to the end of 2025.

Tax Treatment of Quebec Pension Plan contributions

As part of the Canada Pension Plan (CPP) Enhancement announced in 2016, the Income Tax Act was amended to provide a tax deduction on employee contributions to the enhanced portion of the CPP. To provide consistent income tax treatment of contributions to the CPP and the Quebec Pension Plan (QPP), Budget 2018 announced that a tax deduction will be provided on employee contributions to the enhanced portion of the QPP. A tax credit will continue to be provided on employee contributions to the base CPP and QPP. Contributions to the enhanced portion of the CPP and QPP will commence in 2019.

Corporate Income Tax

Accelerated capital cost allowance for clean energy generation equipment

Budget 2018 extended the accelerated capital cost allowance for clean energy equipment under Class 43.2, which provides accelerated tax depreciation for clean energy generation and energy conservation equipment, to property acquired before 2025.

The 2018 Fall Economic Statement announced the Government's intention to introduce full expensing for clean energy equipment. This measure provides an enhanced first-year allowance for property currently eligible for the accelerated capital cost allowance for clean energy equipment under Class 43.1 or 43.2, with limited restrictions, if it is acquired after November 20, 2018 and becomes available for use before 2028. The enhanced allowance will initially provide a 100-per-cent deduction, with a phase-out for property that becomes available for use after 2023. The half-year rule will effectively be suspended for property eligible for this measure.

Accelerated capital cost allowance for manufacturing and processing machinery and equipment

The 2018 Fall Economic Statement announced the Government's intention to introduce full expensing for manufacturing and processing machinery and equipment. This measure provides an enhanced first-year allowance for property currently eligible for the accelerated capital cost allowance for manufacturing and processing machinery and equipment under Class 53, with limited restrictions, if it is acquired after November 20, 2018 and becomes available for use before 2028. The enhanced allowance provides a 100-per-cent deduction, with a phase-out for property that becomes available for use after 2023. The half-year rule will effectively be suspended for property eligible for this measure.

Accelerated Investment Incentive

The 2018 Fall Economic Statement announced the Government's intention to introduce the Accelerated Investment Incentive, which will provide an enhanced first-year deduction for tax depreciation equal to up to three times the amount that would otherwise apply in the year an asset is put in use. The Accelerated Investment Incentive will apply to all capital property, with limited restrictions. The Accelerated Investment Incentive is available for property acquired after November 20, 2018 and that becomes available for use before 2028, subject to a phase-out for property that becomes available for use after 2023.

Preferential tax rate for small businesses

Budget 2018 announced limits on the ability of businesses with more than $50,000 in passive income in a year to benefit from the preferential small business rate. For tax years beginning after 2018, the measure reduces the small business deduction limit, using a straight-line basis, by $5 for every $1 of investment income exceeding the $50,000 threshold, such that the business limit will be reduced to zero at $150,000 of investment income.

Refundable taxes on investment income of private corporations

Budget 2018 announced that Canadian-controlled private corporations would no longer be able to obtain refunds of taxes paid on investment income while distributing dividends from income taxed at the general corporate rate. Existing Refundable Dividend Tax on Hand balances, subject to certain limitations, are not affected by the measure. This measure applies with respect to tax years beginning after 2018.

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