Tax measures re education
It is proposed to amend the Tuition Tax Credit to
recognize fees paid for examinations that are required to obtain a
professional status recognized by federal or provincial statute, or to be
licensed or certified in order to practice a profession in Canada.
taken outside Canada are only eligible for the tuition tax credit
if the course is of a duration of at least 13 weeks. It is proposed
to reduce this required duration to 3 weeks. It is also proposed to
reduce the similar 13 week requirement for Educational Assistance Payments
(EAP) from a Registered Education Savings Plan (RESP) to 3 weeks when
the student is enrolled in a full-time course.
RESPs - asset sharing among siblings: The
budget proposes to allow transfers between individual RESPs for siblings,
without tax penalties and without triggering the repayment of CESGs,
provided that the beneficiary of a plan receiving a transfer of assets had
not attained 21 years of age when the plan was opened.
These measures would apply beginning in 2011.
Kiddie tax extended to capital
Income Tax Act s. 120.4
The budget proposes to extend the tax on split income
to capital gains realized by, or included in the income of, a minor from a
disposition of shares of a corporation to a person who does not deal at
arm's length with the minor, if taxable dividends on the shares would have
been subject to the tax on split income (at the highest marginal tax
rate). These capital gains would be treated as dividends and thus
would not benefit from the lower capital gains inclusion rates, and would
not qualify for the lifetime capital gains exemption.
This measure would apply to capital gains realized on
or after March 22, 2011.
Donations of publicly
listed flow-through shares
The budget proposes that for flow-through shares
acquired by a taxpayer on or after March 22, 2011, the capital gains
exemption on donations of publicly listed securities, if any of these
shares are subsequently donated, will only be available to the extent that
the capital gain exceeds a threshold amount (the "exemption
threshold"). Generally, the threshold amount will be the
original cost of the shares, but the threshold amount will be reduced by
capital gains realized after March 22, 2011, on any shares of the same
Registered Disability Savings Plan
Income Tax Act s. 146.4(1), proposed s. 146.4(1.1) to
Allow RDSP beneficiaries with shortened life
expectancies (five years or less) to make withdrawals without the
requirement to repay the assistance holdback
amount. A medical
doctor must certify as to the life expectancy, and the holder of the plan
can elect for the RDSP to become a specified disability savings plan.
There may be certain circumstances in which the
assistance holdback amount may still have to be repaid, even with a
shortened life expectancy.
This would take effect upon royal assent.
Business Income Tax Changes
For all business tax measures see the Budget 2011
Income Tax Measures.
Manufacturing and processing machinery and equipment
The temporary accelerated capital cost allowance (CCA)
rate of 50% on a straight line basis (subject to the half year rule) is
proposed to be extended another 2 years, to machinery and equipment
acquired before 2014.
After 2013, this machinery and equipment will be
included in class 43, with a 30% declining balance CCA rate.
Clean energy generation equipment (class 43.2)
Class 43.2 provides accelerated capital cost allowance
at a rate of 50% per year on a declining balance basis.
The budget proposes to broaden Class 43.2 to include
equipment that generates electricity using waste heat.
These measures will apply to eligible assets acquired
on or after March 22, 2011 that have not been used or acquired for use
before that date.
Other Measures Proposed
The government announced the phase-out of quarterly
allowances for political parties.
Guaranteed Income Supplement (GIS)
Enhance the GIS to
provide a new top-up benefit of up to $600 annually for single seniors and $840
for couples, starting July 1, 2011, if the legislation is passed quickly enough
Attract health care workers to underserved rural and
remote communities by forgiving up to $40,000 of the federal component of Canada
Student Loans for new family physicians and up to $20,000 for nurse
practitioners and nurses.
Reduce the in-study interest rate for part-time students to zero, as it is for
Excise Duties and Sales and Excise Taxes
GST/HST on Poppies
Provide a rebate for GST/HST paid by Royal Canadian Legion on purchases of
Remembrance Day poppies and wreaths.
Sharing Information With Other Countries
Allow the sharing of information obtained under the Excise Act, 2001 and the
Excise Tax Act with countries or jurisdictions with which Canada has entered
into a tax information exchange agreement.
Sales Tax Harmonization Québec
$2.2 billion is allocated in support of sales tax harmonization with Québec.
Revised: December 21, 2011