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Canada: Tax provisions in 2019 federal budget

Canada: Tax provisions in 2019 federal budget

The Canadian government’s 2019 federal budget was delivered today, 19 March 2019. The budget does not include any corporate or personal (individual) tax rate changes, but there are measures that may affect corporate and personal taxpayers.

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Corporate tax measures include:

  • A $200,000* annual cap on employee stock option grants that may receive tax-preferred treatment
  • Changes to the calculation of the fully refundable enhanced tax credit of 35% for Canadian controlled private corporations (CCPCs) to repeal the use of taxable income as a factor in determining the annual expenditure limit for the purposes of the enhanced scientific research and experimental development (SR&ED) credit for CCPCs
  • Measures to support Canadian journalism, including allowing qualified Canadian journalism organizations to register as qualified donees, and providing a refundable labour tax credit for qualifying journalism organizations and a non-refundable tax credit of up to $75 annually for subscriptions to Canadian digital news
  • Rules to deny a mutual fund trust a deduction for the portion of an allocation made to a unitholder on a redemption that is greater than the capital gain that would otherwise have been realized by the unitholder on the redemption
  • Rules that will not permit derivative transactions to convert income that would otherwise be treated as taxable ordinary income into capital gain
  • Changes to the character conversions transactions to limit the exception for certain commercial transactions that are not subject to these rules


Personal (individual) tax measures include:

  • The introduction of a “Canada Training Benefit”—a refundable tax credit that individuals can use to cover up to half of eligible tuition and training costs, with a $250 notional account each year, and a lifetime limit of $5,000
  • The “Home Buyers’ Plan” withdrawal limit was increased to $35,000 (from $25,000)
  • Announcement of the “Advanced Life Deferred Annuity”—a life annuity that may defer its commencement until the annuitant turns 85

 

Read a March 2019 report [PDF 136 KB] prepared by the KPMG member firm in Canada

 

* $ = Canadian dollar

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