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Federal Budget Canada, 2017; what’s not changing

Investments, Personal Finance

Posted by Peter Wouters

Mar 30, 2017 3:36:22 PM

Directeur, Planification fiscale et successorale et planification de la retraite, Gestion de patrimoine
Placements Empire Vie

Each year brings us lots of speculation about what the Federal Government is planning to do that will give us something or take something away. The past few months have been no exception. Here are six items that aren’t on the list of things being taken away, taxed more or changed. We won’t see major changes to the Income Tax Act (Canada) in the following areas, at least for the time being:

  1. the inclusion rate for capital gains. The rumour mill said that the inclusion rate would increase, reducing the reward for investors putting money into companies and arguably hurting investors and businesses alike. The inclusion rate remains at 50% of the capital gain realized on the sale or deemed sale of most appreciable property.
  2. rules relating to the small business deduction. U.S. President Trump has promised significant cuts to corporate taxes. The Canadian government needs to recognize the importance of remaining competitive as noted in its report, "Creating the Conditions for Economic Growth: Tools for People, Businesses and Communities." The Liberal government campaigned on a promise to incrementally reduce the corporate tax rate for small businesses from 11% to 9%. The rate was reduced to 10.5% last year, after which the government cancelled plans for further reductions, much to the displeasure of small businesses.
  3. tax rules governing group health and dental benefits. The federal government received a lot of negative reaction to proposals which would tax these benefits.
  4. tax treatment of corporate owned life insurance. Changes did take effect on Jan. 1, 2017 as per previous federal budgets and changes to the Income Tax Act (Canada) ;
  5. tax rules governing stock options;
  6. pension income splitting and the pension income deduction. These benefits are particularly appealing to the rapidly growing number of aging Canadians who are moving from accumulating money to turning assets into income generating sources.