Federal Budget 2013
On March 21, 2013, the Honourable Jim Flaherty tabled the 2013-2014 federal budget which focuses on jobs, growth and long-term prosperity. The deficit for the 2013-2014 year is projected to be $18.7 billion with a balanced budget still planned for 2015-2016.
To increase revenue, the budget closed certain “tax loopholes” – for owners of Canadian-Controlled Private Corporations, the personal tax rate that applies on ineligible dividends will be increased to eliminate a tax preference that existed in most provinces by flowing active business through a corporation. Other changes include making the cost of safety deposit boxes non-deductible for income tax purposes, phasing out the labour-sponsored venture capital corporations tax credit, eliminating leveraged life insurance arrangements, tightening corporate and trust loss trading rules and introducing changes to Form T1135-Foreign Income Verification Statement.
On a positive note for taxpayers, the lifetime capital gains exemption will be increased from $750,000 to $800,000 in 2014 and indexed thereafter. An additional 25% credit for up to $1,000 of monetary donations made on or after March 21, 2013 will be available to those who have not claimed donations since 2007. Manufacturing and processing machinery and equipment acquired before 2016 will continue to be eligible for a temporary accelerated capital cost allowance rate of 50% on a straight-line basis. Small businesses will enjoy the extension of the temporary hiring credit of up to $1,000 for one more year.