Finance Tables NWMM for 2015 Federal Budget Bill #1 | KPMG | CA

Finance Tables NWMM for 2015 Federal Budget Bill #1

Finance Tables NWMM for 2015 Federal Budget Bill #1

Finance released a NWMM to implement selected measures announced in 2015.

1000

Related content

Finance released a Notice of Ways of Means Motion (NWMM) on May 4, 2015 to implement selected measures announced in the 2015 budget (see TaxNewsFlash-Canada 2015-18 "2015 Federal Budget Highlights") as well as certain previously announced tax measures.

The 69-page NWMM (35 pages of legislation and 34 pages of explanatory notes) includes the more straightforward personal and corporate tax measures from the 2015 budget. The more complicated tax changes, such as the amendments to subsection 55(2) and Regulation 102 and the new synthetic equity arrangement rules are not included in the NWMM. The NWMM also includes measures to implement the previously announced Family Tax Cut credit and the changes to the Child Care Expense Deduction, Universal Child Care Benefit and Child Tax Credit, as well as the extension to the flow-through mining expenditure tax credit.

Given the impending fall election, it is likely that the government will attempt to pass this first budget bill (including the previously announced measures) into law before Parliament's summer recess begins at the end of June. Otherwise, it's highly unlikely that the legislation can be passed before the October 2015 election.

What's included in NWMM

Corporate tax measures

The NWMM contains measures that:

  • Decrease the small business income tax rate that applies to the first $500,000 of qualifying active business income of a Canadian-controlled private corporation to 9% (from 11%) in 0.5% increments from 2016 to 2019
  • Introduce new CCA Class 53 with an accelerated CCA rate of 50% per year on a declining balance basis for machinery and equipment assets acquired after 2015 and before 2026 that would otherwise be included in Class 29
  • Extend the tax deferral that applies to patronage dividends paid to members of an eligible agricultural cooperative in the form of eligible shares.

Personal tax measures

The NWMM contains measures that:

  • Increase the Tax-Free Savings Account annual contribution limit to $10,000 (from $5,500)
  • Reduce the minimum amount that seniors must withdraw each year from their Registered Retirement Income Funds
  • Increase the tax rate on non-eligible dividends by adjusting the gross-up factor and dividend tax credit that applies to non-eligible dividends
  • Increase the lifetime capital gains exemption to $1 million of capital gains realized by an individual on the disposition of qualified farm or fishing property
  • Revise the calculation of the Family Tax Cut credit to include transferred education-related amounts (such as tuition, education and textbook tax credits)
  • Introduce a 15% non-refundable tax credit for eligible home renovation expenditures for seniors and persons with disabilities to help improve safety, access and functionality of a dwelling
  • Extend the temporary measure to allow a qualifying family member to become the plan holder of a Registered Disability Savings Plan.

Charities and NPOs

The NWMM contains measures that allow certain foreign charitable foundations to be registered as qualified donees.

Other tax measures

The NWMM contains measures that allow certain new employers to immediately remit payroll withholdings on a quarterly basis.

Previous tax measures

The NWMM includes the Family Tax Cut credit and the changes to the Child Care Expense Deduction, Universal Child Care Benefit and Child Tax Credit originally announced in October 2014. This legislation was previously included in Bill C-57, which received first reading on March 27, 2015, but it appears that it has now been combined with the 2015 budget measures to move forward in the legislative process.

The NWMM also includes a change to the flow-through mining expenditure definition in subsection 127(9) which extends the related credit to include expenses incurred after March 2015 and before 2017 where they are renounced through share agreements entered into after March 2015 and before April 2016. This change legislates the extension announced in March.

What's not included in NWMM

The NWMM does not include the following more substantial tax changes in the budget, including measures to:

  • Amend subsection 55(2) to introduce a new purpose test and to paragraph 55(3)(a) to restrict its application to deemed dividends arising under subsection 84(3)
  • Amend the Regulation 102 withholding rules to introduce an exception where certain conditions are met
  • Amend the failure to report penalty
  • Modify the dividend rental arrangement rules to deny the inter-corporate dividend deduction under synthetic equity arrangements
  • Allow a registered charity to hold a limited partnership interest in certain circumstances
  • Exempt from capital gains tax gains occurring on the disposition of shares of private corporations and real estate where the cash proceeds of disposition are donated to a qualified donee and certain conditions are met
  • Tighten the anti-avoidance rules for captive insurance companies
  • Introduce new T1135 streamlined reporting

The NWMM also does not include any comments on tax areas for which consultations are still ongoing or which have not yet been announced, such as:

  • Qualification as active business (including a review of the five full-time employee test)
  • Eligible capital property
  • BEPS
  • Non-profit status.

For more information, contact your KPMG adviser.

Disclaimer

Information is current to May 05, 2015. The information contained in this publication 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.

For more information, contact KPMG's National Tax Centre at 416.777.8500

Connect with us

 

Request for proposal

 

Submit