Employment and the economy are still priorities in achieving a balanced budget in 2015

Federal budget March 21, 2013

Today, Canadian Finance Minister, the Honourable James M. Flaherty, presented his eighth budget, the second budget of the Conservative majority government. Although a budgetary deficit of $18.7 billion is anticipated for 2013-14, a surplus of $800 million is projected by fiscal 2015-16.

In this uncertain environment, the government’s focus is clear: jobs and the economy. Economic Action Plan 2013 builds on the foundation that was laid last year with measures to create jobs, promote growth and support longterm prosperity. Several measures, in particular, are intended to assist the struggling manufacturing sector.

From a tax perspective, previous budgets have adopted a number of rules to close tax loopholes and prevent certain business and individuals from avoiding taxes. This year’s budget is no different. A number of new measures have been introduced to close tax loopholes and combat international tax evasion and tax avoidance.

The government also announced its intention to consult on possible measures to eliminate the tax benefits that arise from taxing testamentary and certain other trusts at graduated rates. A consultation paper will be publicly released to provide stakeholders with an opportunity to comment on these possible measures.

Finally, previous budgets had noted the government’s interest in exploring the issue of whether new rules for the taxation of corporate groups—such as the introduction of a
formal system of loss transfers or consolidated reporting— could improve the functioning of the corporate tax system in Canada. Following extensive public consultations, the government has concluded that moving to a formal system of corporate group taxation is not a priority at this time.

The following is a summary of the tax measures that were addressed in this year’s budget. Please contact us for more information on any of these measures.