Flaherty Resubmits Canadian Budget

by Mike Godfrey, Tax-News.com, Washington

08 June 2011

Canada's Minister of Finance, Jim Flaherty has reintroduced Budget 2011, entitled 'the Next Phase of Canada's Economic Action Plan—A Low-Tax Plan for Jobs and Growth', which failed to be adopted prior to the dissolution of parliament on March 26, 2011.

The Budget includes all the measures that were part of the unadopted March 22 budget although the following measures have been added:

• Provision has been made in 2011–12 for CAD2.2bn (USD2.3bn) in support of the conclusion of a satisfactory agreement between Canada and Quebec on sales tax harmonization, consistent with the government’s commitment in this regard; and,
• The government is announcing the phase-out of quarterly allowances for political parties.

As announced in March, the salient tax measures in the 2011 Budget include:

• Support for the manufacturing and processing sector through a two-year extension of the temporary accelerated capital cost allowance treatment for investment in manufacturing or processing machinery and equipment;
• A permanent annual investment of CAD2bn in the Gas Tax Fund aimed at providing predictable, long-term infrastructure funding for municipalities;
• The introduction of a new CAD2,000 Family Caregiver Tax Credit amount that will provide tax relief to care-givers of infirm dependent relatives including, for the first time, spouses, common-law partners and minor children;
• The introduction of a new Children’s Arts Tax Credit on up to CAD500 per child of eligible fees associated with children’s artistic, cultural, recreational and developmental activities;
• The introduction of a CAD3,000 Volunteer Firefighters Tax Credit amount for volunteer firefighters who perform at least 200 hours of service in their communities;
• Making all occupational, trade and professional examination fees eligible for tax relief to encourage skills certification; and,
• Measures to 'protect the integrity and fairness' of the Canadian tax system by closing tax loopholes.

The budget aims to also cut expenditure in the public sector by finding spending efficiencies worth CAD500m.

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