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Canada Records Budget Surplus In November

by Mike Godfrey,, Washington

03 February 2015

Canada recorded a budget surplus of CAD600m (USD470m) in November 2014, a month after the introduction of "income splitting" at an annual cost of CAD1.6bn.

The latest Fiscal Monitor shows that revenues have increased by 4.5 percent (CAD1bn) since November 2013. Program expenses decreased by 0.4 percent (CAD100m).

Revenues in November 2014 totaled CAD22.8bn. An increase in personal income tax and other revenues was partially offset by a fall in corporate income tax revenues.

Personal income tax revenues were up 8.7 percent (CAD1bn), while corporate tax revenues were down CAD400m. Excise taxes and duties were up 3.7 percent (CAD200m) and goods and services tax revenues increased by CAD100m.

The October Fiscal Monitor included a CAD1.6bn adjustment to revenues, to include the year-to-date costs of the introduction of the Family Tax Cut and the doubling of the Children's Fitness Tax Credit (CFTC). In November, the Government announced that, from the 2014 tax year, families would be able to split up to CAD50,000 of their income each year for tax purposes. The previous month, the Government unveiled plans to increase the maximum amount that can be claimed under the CFTC, from CAD500 to CAD1,000, and to make the credit refundable from the 2015 tax year.

For the period April to November, 2014, there was a budgetary deficit of CAD3.3bn, compared with a deficit of CAD13.4bn during the same period in 2013-14. Revenues increased by 3.8 percent (CAD6.3bn), to CAD173bn.

The Canadian Government intends to balance the budget in 2015-16 and to return to a surplus thereafter. It says that it will deliver nearly CAD27bn in tax relief and increased benefits for families with children over the next five tax years.

At the end of last month, Finance Minister Joe Oliver welcomed the findings of the International Monetary Fund's (IMF's) new Staff Report on the country, which noted that "the federal Government is essentially on track to achieving its balanced budget target in fiscal year 2015-16."

Oliver said: "The IMF confirms that our Government's Economic Action Plan is a proven formula for creating jobs, growth, and long-term prosperity, through lower taxes and a return to balanced budgets in 2015. Given the fragile state of the global economy, this assessment underscores the wisdom of staying the course, balancing the budget, and building on our progress."

TAGS: tax | tax incentives | budget | corporation tax | goods and services tax (GST) | ministry of finance | tax rates | Canada | revenue statistics | tax reform | individual income tax | services

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