Canada’s Fall Economic Update will be delivered on November 21, 2018
Canada's upcoming Fall Economic Update is expected to include measures that may respond to recent U.S. tax reform changes. Although the government usually doesn't discuss specific details of the Fall Economic Update until it's released, there are indications about some of the measures that could be included. This year, Finance Canada has indicated that the Fall Economic Update will be developed with consideration towards maintaining Canada's competitive position.
Previously, we looked at some of the U.S. tax changes that affected Canadian businesses. To help determine what Finance Canada has in store for its Update, it's worth considering recent government reports and releases, along with other comments by Finance Minister Bill Morneau.
Capital cost allowance — A recent federal report by Canada's Economic Strategy Tables, a collaboration between the government and industry leaders, recommends that Canada match U.S. tax reform measures that allow a 100% depreciation deduction in the first year for investments in equipment until 2023. According to the paper, this proposal could allow Canadians to lower their business costs and boost adoption of innovative technologies.
Innovation — The report by Canada's Economic Strategy Tables also recommends that Finance expand access to the Scientific Research and Experimental Development (SR&ED) tax credit program and introduced targeted measures for certain industries. Specifically, the report suggests that Canada redesign its SR&ED program to help companies scale up and support high-performing scale-ups. The report also says that Finance should update the SR&ED eligibility criteria for digital projects and allow businesses with capital from outside of Canada to be eligible for the credit.
Corporate tax rates — Some stakeholders, including the Senate Banking Committee, have indicated that Canada should reduce its corporate tax rates in response to U.S. tax reform while others, including the Office of the Parliamentary Budget Officer (PBO), are cautioning against such a change. For now, Finance Minister Bill Morneau is reportedly considering all options to boost Canada's competitiveness.
If tax changes are announced in this year's Fall Economic Update, your KPMG adviser can help you understand their effect on your personal finances or business affairs, and point out ways to ease their impact or recognize new opportunities. You will be able to find the latest information and insights on the Fall Economic Update from your KPMG adviser and on our website.
Information is current to November 19, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500