Federal Budget -> 2014 Budget
Federal 2014 Budget / Economic Action Plan - February 11, 2014
See the following on the 2014 Federal Budget, Department of Finance and Parliament websites:
October 2014 Federal Tax Update - Family Tax Cut 2014, 2015 tax changes
The information below is only a part of the Budget. All tax measures are subject to legislative approval.
The Government indicates that it is on track to return to balanced budgets by 2015-2016.
Adoption Expense Tax Credit
The budget proposes to increase the non-refundable tax credit for adoption expenses for 2014 from $11,774 to $15,000 per child, indexed to inflation after 2014.
Medical Expense Tax Credit (METC)
The budget proposes that amounts paid for the design of an individualized therapy plan for an individual eligible for the Disability Tax Credit be eligible for the METC if the cost of the therapy itself would be eligible for the METC and certain conditions are met. This measure will apply to expenses incurred in 2014 and later years.
Search and Rescue Volunteers Tax Credit (SRVTC)
The budget proposes to allow search and rescue volunteers to claim a 15% non-refundable tax credit based on an amount of $3,000, starting in 2014. This equates to a tax reduction of $450.
Pension Transfer Limits
The pension transfer limit formula in the Income Tax Act determines the portion of a lump-sum commutation payment from a defined benefit RPP, received by a plan member who is leaving the RPP, that may be transferred to an RRSP on a tax-free basis. Generally, in situations where a plan member's commutation payment is reduced due to plan underfunding, the transferable amount is based on that lower commutation payment, and the portion of a plan member's commutation payment that exceeds the transferable amount must be included in the taxpayer's income for the year in which it is received.
A special rule was introduced in 2011 that applied in limited circumstances regarding insolvent employers where the RPP is being wound up, that allowed the maximum transferable amount to be the same as if the RPP were fully funded.
The budget proposes to allow this special rule to apply in additional situations:
The application of this rule must be approved by the Minister of National Revenue. This measure will apply in respect of commutation payments made after 2013.
The budget proposes to eliminate the need for an individual to apply for their GST/HST Credit and to allow the CRA to automatically determine if an individual is eligible to receive the credit.
Tax on Split Income
The Income Tax Act contains rules which reduce the ability of a higher-income taxpayer to split taxable income inappropriately with lower-income individuals. One of these rules is referred to as the "tax on split income". The highest marginal tax rate (currently 29%) applies to "split income" paid or payable to a minor, which generally includes:
The budget proposes that the definition "split income" in the Income Tax Act be modified to include income that is, directly or indirectly, paid or allocated to a minor from a trust or partnership, if:
This measure will apply to the 2014 and subsequent taxation years. It is included in the August 29, 2014 draft legislation.
Amateur Athlete Trusts
The budget proposes to allow income that is contributed to an amateur athlete trust to qualify as earned income for the purpose of determining the RRSP contribution limit of the trust's beneficiary. This will apply to contributions made after 2013. In addition, individuals who contributed to an amateur athlete trust before 2014 will be permitted to make an election to have income that was contributed to the trust in 2011, 2012 and 2013 also qualify as earned income. Any additional RRSP room will be added to the individual's RRSP contribution room for 2014. The election must be in writing and submitted to Canada Revenue Agency on or before March 2, 2015. This proposal is included in the August 29, 2014 draft legislation.
Certain estates and trusts, including testamentary trusts created by will, compute federal income tax on taxable income using the graduated tax rates applicable to individuals.
Budget 2014 proposes to generally proceed with the measures described in the consultation paper released on June 3, 2013. This proposal is included in the August 29, 2014 draft legislation.
Testamentary trusts that do not already have a calendar year taxation year will have a deemed taxation year-end on December 31, 2015 (or in the case of an estate for which that 36-month period ends after 2015, the day on which that period ends).
This measure will apply to the 2016 and subsequent taxation years.
Donations of Ecologically Sensitive Land
Budget 2014 proposes to extend to 10 years (from 5 years) the carry-forward period for donations of ecologically sensitive land, or easements, covenants and servitudes on such land. This measure will apply to donations made on or after February 11, 2014.
Donations of Certified Cultural Property
The budget proposes to remove, for certified cultural property acquired as part of a tax shelter gifting arrangement, the exemption from the rule that deems the value of a gift to be no greater than its cost to the donor. Other donations of certified cultural property will not be affected by this measure. This measure will apply to donations made on or after February 11, 2014.
Where an individual makes a donation by will, the donation is treated for tax purposes as having been made immediately before death. The treatment is the same where a qualified donee is designated as the beneficiary under an RRSP, RRIF, TFSA or life insurance policy. In these circumstances, the Charitable Donations Tax Credit (CDTC) may be applied against only the individual's income tax otherwise payable.
For a donation made by an individual's estate, the CDTC may be applied against only the estate's income tax otherwise payable.
The budget proposes that, for the 2016 and subsequent taxation years, donations by will and designation donations will be deemed to have been made by the estate, at the time at which the property that is the subject of the donation is transferred to a qualified donee. This proposal is included in the August 29, 2014 draft legislation.
Also, the available donation will be allowed to be allocated among any of:
The current limits that apply to determine the total donations that are creditable in a year will continue to apply. A qualifying donation will be a donation effected by a transfer, within the first 36 months after the individual's death, of property to a qualified donee.
An estate will continue to be able to claim a CDTC in respect of other donations in the year in which the donation is made or in any of the 5 following years.
Extension of the Mineral Exploration Tax Credit for Flow-Through Share Investors
Budget 2014 proposes to extend eligibility for the Mineral Exploration Tax Credit for one year, to flow-through share agreements entered into on or before March 31, 2015.
Remittance Thresholds for Employer Source Deductions
The budget proposes to reduce the frequency of remittance of source deductions for employers, regarding amounts to be withheld after 2014, as follows:
Tax Incentives for Clean Energy Generation
Budget 2014 proposes to expand Class 43.2 to include water-current energy equipment and equipment used to gasify eligible waste fuel for use in a broader range of applications. This measure will apply to property acquired on or after February 11, 2014, that has not been used or acquired for use before that date. This measure is included in the August 29, 2014 draft legislation.
Consultation on Eligible Capital Property
The budget announces a public consultation on a proposal to repeal the existing eligible capital property (ECP regime, replace it with a new capital cost allowance (CCA) class available to businesses, and transfer taxpayers' existing cumulative eligible capital (CEC) pools to the new CCA class. Detailed draft legislative proposals will be released for comment at an early opportunity.
Revised: March 19, 2019
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