Federal Budget, April 21, 2015

It was to be expected that in this first balanced budget in the Conservative government’s eight years in power and, in the context of an election, measures would be introduced to stimulate wealth and employment, pivotal issues for the country’s growth.

The 2015 Economic Action Plan tabled today by the Honourable Joe Oliver, federal Minister of Finance, has provided for no income or commodity tax increases and includes attractive incentives to support Canadian individuals and businesses.

Among the measures to sustain Canada’s economic growth, of note is the decrease in the small business tax rate to 9% as of 2019. The current 11% rate will drop gradually, in 0.5% increments, starting in January 2016.

Another measure that supports the Canadian manufacturing sector’s competitiveness is the 10-year investment incentive for manufacturing businesses. Additionally, to encourage ongoing investment in machinery and equipment and increase productivity, manufacturers will be entitled to an accelerated CCA of 50%, declining balance, for eligible assets acquired after 2015 and before 2016.

On the innovation front, the government is announcing it will provide an additional $1.3 billion over six years to the Canada Foundation for Innovation to assist Canadian researchers.

In order to modernise infrastructures and create jobs, the federal government has opted to provide $5.35 billion per year on average for provincial, territorial and municipal infrastructure under the New Building Canada Plan. Additionally, it is creating a new Public Transit Fund and providing an additional $750 million over two years, starting in 2017–18, and $1 billion per year ongoing thereafter.

Of interest for individuals is the increase in the annual TFSA contribution limit from $5,500 to $10,000 and a new home accessibility tax credit as of 2016. A 15% tax credit on a maximum amount of $10,000 in expenditures incurred for this purpose.

Upcoming consultation

Lastly, there will be a consultation to review “the circumstances in which income from a business, the principal purpose of which is to earn income from property, should qualify as active business income.” Interested parties are invited to submit comments on the difference between an active versus an investment business by August 31, 2015.

We invite you to read the following pages for an overview of the main measures.