On March 22, 2017 the Honourable Bill Morneau, Minister of Finance, presented the 2017 Federal Budget, Building a Strong Middle Class, to the House of Commons.
The Government’s fiscal position includes a projected deficit in 2016-2017 of $23.0 billion, and projected deficits in the coming years as follows: 2017-2018 of $28.5 billion, 2018-2019 of $27.4 billion, 2019-2020 of $23.4 billion, 2020-2021 of $21.7 billion and 2021-2022 of $18.8 billion.
From Focus LLP, CPA, your Calgary Tax Accountants, in collaboration with Video Tax News Inc., we have provided a summary of the major budget changes over the following blogs:
GST AND OTHER TAX CHANGES:
Taxi and Ride-Sharing Services
Budget 2017 proposes to amend the definition of a taxi business to include all persons engaged in a business of transporting passengers for fares by motor vehicle within a municipality and its environs where the transportation is arranged for or coordinated through an electronic platform or system, such as a mobile application or website. As taxi businesses do not qualify for the small supplier exemption, they are required to register for, and collect, GST/HST.
These changes will only apply to transportation that is supplied in the course of a commercial activity. These changes will not apply to a school transportation service for elementary or secondary students or a sightseeing service.
It seems likely this proposal was intended, at least in part, to resolve ongoing uncertainty of the GST/HST status of services such as Uber.
This proposal will be effective July 1, 2017.
Naloxone
Budget 2017 proposes to address an issue related to naloxone, a drug used to treat opioid (e.g. fentanyl) overdose. At present, the drug is GST/HST free only when issued under a prescription, and not when used in emergency situations with no prescription. Budget 2017 proposes to add naloxone to the list of GST/HST-free prescription drugs used to treat life-threatening conditions.
The measure will generally come into effect on March 22, 2016, with exceptions for pre-Budget Day situations where GST/HST has already been charged, collected, remitted or paid.
Tour Package Accommodations
Budget 2017 proposes to repeal the GST/HST rebate available to non-residents for the GST/HST that is payable in respect of the accommodation portion of eligible tour packages. The Budget indicates that the Government will invest in enhanced tourism marketing.
This repeal will generally apply in respect of supplies of tour packages or accommodations made after Budget Day. As a transitional measure, the rebate will continue to be available in respect of a supply of a tour package or accommodations made before January 1, 2018 if all of the consideration for the supply is paid before January 1, 2018.
Tobacco Taxation
Budget 2017 proposes to eliminate the tobacco manufacturers’ surtax. In order to maintain the intended tax burden of the manufacturers’ surtax on tobacco products, Budget 2017 also proposes to increase tobacco excise duty rates, effective the day after Budget Day. The increased excise taxes will apply to inventory of tobacco products at the end of Budget Day, to be remitted by May 31, 2017.
Alcohol Taxation
Budget 2017 proposes that excise duty rates on alcohol products be increased by 2 per cent effective the day after Budget Day, in respect of duty that becomes payable after that date. No special inventory tax will apply to alcohol products on which duty has been paid. In order to maintain their effectiveness, it is also proposed that the rates be automatically adjusted by the Consumer Price Index on April 1 of every year, starting in 2018.
Corporate and Beneficial Ownership Transparency
The Government will collaborate with provinces and territories to put in place a national strategy to strengthen the transparency of legal persons and legal arrangements and improve the availability of beneficial ownership information.
These actions are aimed to give law enforcement and other authorities timely access to the information needed to crack down on money laundering, terrorist financing and tax evasion and to combat tax avoidance.
Electronic Distribution of T4 Information Slips
Budget 2017 proposes to allow employers to distribute T4 (Statement of Remuneration Paid) information slips electronically to current active employees without having to obtain express consent from those employees in advance. Required privacy safeguards will be specified by the Minister of National Revenue. Paper T4s will continue to be required for some employees.
This measure will apply in respect of T4s issued for the 2017 and subsequent taxation years.
Employment Insurance
Caregiving
Budget 2017 proposes to create a new Employment Insurance (EI) caregiving benefit. The new benefit will give eligible caregivers up to 15 weeks of EI benefits while they are temporarily away from work to support or care for a critically ill or injured family member.
Training
Budget 2017 indicates that, currently, a large number of unemployed and underemployed Canadians are not eligible for Employment Insurance (EI)-funded training under the Labour Market Development Agreements. Budget 2017 also proposes to invest an additional $900 million over six years, starting in 2017–18, for new Workforce Development Agreements.
The Workforce Development Agreements, which will consolidate the existing Canada Job Fund Agreements, the Labour Market Agreements for Persons with Disabilities and the Targeted Initiative for Older Workers, will make transfers to the provinces and territories simpler and more flexible.
In addition to these investments, the Government proposes an amendment to broaden worker eligibility for programs and services under the Labour Market Development Agreements, allowing even more Canadians, especially underrepresented groups, to access EI-funded skills training and employment supports.
Flexibility
Budget 2017 proposes to make EI parental benefits more flexible. Proposed changes will allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower benefit rate of 33 per cent of average weekly earnings. EI parental benefits will continue to be available at the existing benefit rate of 55 per cent over a period of up to 12 months.
Budget 2017 also proposes to allow women to claim EI maternity benefits up to 12 weeks before their due date (expanded from the current standard of 8 weeks).
Employment Insurance Premiums
Budget 2017 indicates that the EI premium rates are expected to increase to $1.68 per $100 of insurable earnings, commencing in 2018-2019.
Adult Learners
Budget 2017 announced numerous measures intended to enhance the ability of adult students to pursue educational updates. These include:
• expansion of eligibility for Canada Student Grants for students attending school part-time;
• increasing the threshold for eligibility for Canada Student Loans for part-time students;
• a three-year pilot project to test new approaches to make it easier for adult learners to qualify for Canada Student Loans and Grants, starting in the 2018–2019 academic year;
• enhancing the ability of EI claimants to pursue self-funded training while maintaining their EI status; and
• establishing a new organization to support skills development and measurement in Canada.
Business Fees
Budget 2017 indicates that the Government is proposing to make changes to the legislative framework governing fee setting for government services. The proposed changes are intended to streamline the fee setting process while ensuring continued accountability and oversight. In addition, an automatic inflation escalator is proposed to allow existing business fees to keep pace with costs. Details of specific fees are not included in Budget 2017.
Canada Savings Bonds (CSB) Phasing Out
Budget 2017 announces that the Government will discontinue the sales of new CSBs in 2017. Existing CSBs will be unchanged.
Increased Funding for CRA
Budget 2017 will invest an additional $523.9 million over five years to prevent tax evasion and improve tax compliance. The investment will be used to fund initiatives and extend existing programs such as:
• increasing verification activities;
• hiring additional auditors and specialists with a focus on the underground economy;
• developing robust business intelligence infrastructure and risk assessment systems to target high-risk international tax and abusive tax avoidance cases; and
• improving the quality of investigative work that targets criminal tax evaders.
DISCLAIMER:
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional.
No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.