March 22, 2016, No. 2016-12. Finance Minister Bill Morneau delivered the government’s 2016 federal budget today. The budget expects a deficit of $5.4 billion for fiscal 2015-2016 and forecasts a deficit of $29.4 billion for 2016-2017.
The major tax changes contained in the budget include the elimination of certain tax credits such as income splitting for couples with children, the Child Fitness Tax Credit, the Children’s Art Credit and the Education Tax Credit and Textbook Tax Credit. As expected, a new Canada Child Benefit was introduced. There were no changes introduced to the capital gains inclusion rate or the stock options deduction.
The budget keeps the small business tax rate at 10.5% on the first $500,000 of business income. Furthermore, the budget precludes the multiplication of the small business deduction in certain partnership and corporate structures. As well, the budget repeals the eligible capital property regime, which will be replaced with a new capital cost allowance class. The use of life insurance policies to distribute amounts tax free to shareholders has also been tightened up.
Information is current to March 22, 2016. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.