A majority budget: on the road to a surplus for 2015-2016

Today, Canadian Finance Minister, the Honourable James M. Flaherty, presented the first budget of the Conservative majority government; his objective is to generate a $3.4 billion surplus as of 2015-2016.
Spending cuts will achieve savings of about $5.2 billion, representing less than 2% of program spending in 2016–17 or 0.2% of Canada’s GDP that same year.

Compared with other G7 members, Canada has fared well, despite the debt crisis and European banking crisis that continue to undermine the world economy. While Canada expects modest growth in the short term, the government has chosen to support business and entrepreneurs directly by encouraging innovation and prosperity.

To support research, innovation and entrepreneurship, the 2012 economic action plan will provide $1.1 billion over five years in direct research and development support and $500 million in venture capital. However, the significant Scientific Research and Experimental Development (SR&ED) Tax Incentive Program will unfortunately see a $1.33 billion reduction in business credits over five years. The SR&ED measures are summarized in this document.

Other measures include $165 million over two years for natural resource development and a streamlined review process for major economic projects in order to reduce red tape, encourage investors and contribute to the economic viability of major projects.

Lastly, one measure that affects all Canadians is the gradual increase of the Old Age Security age of eligibility from 65 to 67 for anyone born after March 31, 1958.

Please contact us for more information on the tax measures in this bulletin.