Canada Releases Tax Expenditures Report

by Mike Godfrey, Tax-News.com, Washington

16 January 2012

The Canadian Department of Finance has released its 2011 Tax Expenditures and Evaluations report detailing the revenue impacts of federal tax measures.

The publication provides estimates and projections of the revenue impacts of federal tax measures designed to support the government's economic and social priorities.

The report reflects tax relief measures from the Next Phase of Canada’s Economic Action Plan, unveiled in the 2011 Budget.

The report shows that the largest personal income tax 'expenditure' was the personal income tax allowance, which cost CAD29.5bn (USD29bn) in lost revenue. The largest corporate income tax expenditure item was CAD7.1bn in dividend tax refunds to private corporations.

New tax reliefs introduced in the Budget include a Children's Arts Tax Credit, a Volunteer Firefighters Tax Credit and a Family Caregiver Tax Credit.

The report also includes an analytical paper entitled “Distributional Impact of the Federal Personal Income Tax System and Refundable Credits: Analysis by Income, Sex, Age and Family Status” as well as an evaluation of the Public Transit Tax Credit, introduced in July 2006.

Commenting, Finance Minister Jim Flaherty said: “In an uncertain global economy, our government will stay the course with our low-tax plan for jobs and growth—a plan that has worked and served Canadians well".

“Our economic leadership will continue as we stick to our plan to return to fiscal balance in the medium-term, implement our deficit reduction action plan to find savings within government spending, and take targeted actions when necessary to support the recovery,” Flaherty added.

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