Finance Minister Bill Morneau delivered Canada's 2017 federal budget earlier today, March 22, 2017.
The budget expects a deficit of $23 billion for fiscal 2016-2017 and forecasts a deficit of $28.5 billion for 2017-2018.
The budget continues the government’s strong focus on innovation and skill development. Although the budget did not feature significant tax changes, it does include many measures that affect Canadian businesses and individuals. Specifically, it made changes to the timing and recognition of gains and losses for derivatives, and clarified the definition of factual control used, for instance, in determining whether two or more Canadian controlled private corporations (CCPCs) are associated corporations. The budget also eliminates the ability for designated professionals to elect to use billed-basis accounting. Further, the budget announced that Finance is reviewing the use of certain tax planning strategies involving private corporations.
As expected, the budget eliminates certain personal tax credits and deductions including the public transit tax credit and the home relocation loan deduction. However, the budget did not include any changes to the capital gains inclusion rate, stock options or any specific tax measures related to the OECD Base Erosion and Profit Shifting (BEPS) initiative.
With this budget, the government is investing in innovation and skills training to accelerate growth. Included in this investment is $950 million over five years to support a small number of business-led innovation clusters, as well as an additional $400 million over five years to support certain new clean technologies. As part of Canada’s skills development program, the budget also contains improvements to the temporary foreign worker program and to the international mobility program.
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