2011 Federal Budget Report
Important Note: The 2011 Federal budget was re-released on June 6, 2011. The tax initiatives summarized in this report were reissued along with some new initiatives. For more information on the new initiatives, please see our Tax Alert.
Highlights
- Deficit of $40.5 Billion for 2010-11
- Projected Deficit of $29.6 Billion for 2011-12
- No New Personal or Corporate Taxes
- Extension of Accelerated CCA for Manufacturers
- Elimination of Corporate Tax Deferral for Partnership Income
- Strengthening Compliance in Charitable Sector
- New Personal Tax Credits
“A Low-Tax Plan for Jobs and Growth"
On March 22, 2011, the Honourable Jim Flaherty tabled his sixth budget as Minister of Finance. Immediately after the budget was tabled, all three opposition parties indicated they would not support the budget which means a federal election appears imminent.
There was good news today on the deficit. The federal government now predicts that it will have a deficit for the 2010-11 fiscal year of $40.5 billion, down from the original forecast of $49.2 billion in last year's budget. The deficit for the 2011-12 fiscal year is projected to be $29.6 billion. It now appears the budget may be balanced by the 2014-15 fiscal year, as only a $0.3 billion deficit is forecast. The government projections show a surplus for the 2015-16 fiscal year.
In recent months, the government's corporate tax rate cuts have been a target for opposition parties but the Finance Minister has insisted that the government will maintain these cuts. These reductions are law and no reference was made to them in today's budget.
The budget contained many targeted changes but no major changes in government policy. Personal tax changes were focused on specific issues and no general personal tax relief was provided. The same was true for the corporate changes announced, although manufacturers will benefit from an extension of accelerated capital cost allowance rules and small businesses will enjoy a credit against employment insurance premiums for new hires. There were no GST or international tax changes.
One proposal will affect corporations (other than professional corporations) that are members of partnerships. Under changes similar to those that applied to individuals in 1995, these corporations will lose the benefit of the income tax deferral that can arise where the partnership and the corporation have different year-ends. Unlike the 1995 change, the financial impact will be phased in over 5 years rather than 10 years.
The government closed other "tax loopholes" related to capital gains realized by minors on certain dispositions, individual pension plans, the donation of flow-through shares to charities and certain perceived RRSP abuses.
The following is a summary of issues that will be of interest to our clients.
Key Economic Statistics
|
(Deficit in billions $)
|
2010-2011
Revised
|
2011-2012
Projected
|
2012-2013
Projected
|
|
Budgetary Revenue
|
235.6
|
249.1
|
264.4
|
|
Program Expenses
|
245.2
|
245.7
|
247.3
|
|
|
-9.6
|
3.4
|
17.1
|
|
Public Debt Charges
|
30.9
|
33.0
|
36.5
|
|
Budgetary Balance
|
-40.5
|
-29.6
|
-19.4
|
|
Federal Debt
|
556.4
|
586.0
|
605.4
|
PERSONAL TAX MEASURES
Children's Arts Tax Credit
The budget proposes to introduce a Children's Arts Tax Credit, equal to a 15% non-refundable tax credit based on an amount of up to $500 in eligible expenses per child paid in a year. The credit will be available for the enrolment of a child, who is under 16 years of age at the beginning of the year, in an eligible program of artistic, cultural, recreational or developmental activities. For a child who is under 18 years of age at the beginning of the year and is eligible for the Disability Tax Credit, the 15% non-refundable tax credit may be claimed on an additional $500 disability supplement amount when a minimum of $100 is paid in eligible expenses. This credit will be available in 2011 and subsequent taxation years.
Volunteer Firefighters Tax Credit
The budget proposes a Volunteer Firefighters Tax Credit to allow eligible volunteer firefighters to claim a 15% non-refundable tax credit based on an amount of $3,000 beginning in 2011. An eligible individual will be a volunteer firefighter who performs at least 200 hours of volunteer firefighting services in a taxation year, for one or more fire departments. An individual who claims the credit will be ineligible for the existing tax exemption of up to $1,000 for honoraria paid by a government, municipality or public authority in respect of firefighting duties.
Family Caregiver Tax Credit
To provide new support to caregivers of dependants with a mental or physical infirmity, including spouses, common-law partners and minor children, the budget proposes to introduce a Family Caregiver Tax Credit. This 15% non-refundable credit will be based on an amount of $2,000 and will apply beginning in 2012. Caregivers will benefit from the Family Caregiver Tax Credit by claiming an enhanced amount for an infirm dependant under one of the existing dependency-related credits. The net income phase-out of this credit will vary depending on the nature of the dependant credit claimed.
Medical Expense Tax Credit for Other Dependants
Under current rules, a caregiver may only claim the eligible expenses of certain "dependent" relatives that exceed the lesser of 3% of the dependant's net income and an indexed dollar threshold ($2,052 in 2011), to a maximum of $10,000. In contrast, there is generally no limit on the amount of eligible expenses a taxpayer can claim for himself or herself, a spouse or common-law partner or a child under 18 years of age. The budget proposes to remove the $10,000 limit on eligible expenses that can be claimed under the Medical Expense Tax Credit in respect of a dependent relative for the 2011 and subsequent taxation years.
Child Tax Credit Eligibility
The Child Tax Credit (CTC) is a 15% non-refundable credit based on an indexed amount ($2,131 in 2011) that can be claimed by parents for each child who is under 18 years of age at the end of a taxation year. To ensure that sharing a home does not prevent otherwise-eligible parents from claiming the CTC in respect of their children, the government proposes to repeal the rule that limits the number of CTC claimants to one per domestic establishment for the 2011 and subsequent taxation years.
RDSPs - Shortened Life Expectancy
In recognition of the greater immediate need for Registered Disability Savings Plan (RDSP) beneficiaries with shortened life expectancies to access their savings, the budget proposes to provide such beneficiaries more flexibility to withdraw their RDSP assets without requiring the repayment of Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Bonds (CDSBs). Under the current rules there is a "10-year repayment rule" whereby all CDSGs and CDSBs received by an RDSP in the preceding 10 years be held by financial institutions, which must be repaid to the government in the event of a withdrawal or termination of the plan. The budget proposes to allow RDSP beneficiaries who have shortened life expectancies to withdraw more of the RDSP savings by permitting annual withdrawals without triggering the 10-year repayment rule, subject to specified limits and certain conditions. The current shortened life expectancy rules will apply for eligibility. To take advantage of this measure, an election in prescribed form with medical certification will have to be submitted to the RDSP issuer. If the election is made, withdrawals made after that time will not trigger the repayment of the CDSGs and CDSBs provided the total of the taxable portions does not exceed $10,000 annually. Certain rules will apply on an ongoing basis unless a plan holder reverses the election or if withdrawals of taxable amounts exceed the annual $10,000 limit.
Tuition Tax Credit - Examination Fees
The Tuition Tax Credit rules will be amended to recognize fees exceeding $100 paid to an educational institution, professional association, provincial ministry or other similar institution to take an examination that is required to obtain a professional status recognized by federal or provincial statute, or to be licensed or certified in order to practice a profession or trade in Canada. Ancillary fees and charges paid in respect of occupational, trade or professional examinations will also be eligible for the credit. Note that eligible ancillary fees and charges will not include costs for travel, parking, equipment or other costs that are currently ineligible for the Tuition Tax Credit. This credit will not apply to entrance exams taken in order to begin study in a profession or field. An amount will be considered to have been paid in respect of the year in which the examination is taken. This measure will apply to eligible amounts paid in respect of examinations taken in 2011 and subsequent taxation years.
Education Tax Measures - Study Abroad
To improve the tax recognition of education costs and access to Educational Assistance Payments (EAPs) from an RESP for Canadian post-secondary students who study outside Canada, it is proposed that the minimum course-duration requirement that a Canadian student at a foreign university must meet in order to claim the Tuition, Education and Textbook Tax Credits be reduced to three consecutive weeks of full-time attendance from 13 consecutive weeks. Similarly, it is proposed that the 13 consecutive week requirement for EAP purposes be reduced to three consecutive weeks when the student is enrolled at a university in a full-time course. This measure will apply with respect to tuition fees paid for courses taken in the 2011 and subsequent taxation years and to EAPs made after 2010.
RESPs - Asset Sharing Among Siblings
Although family plans allow RESPs to benefit multiple children, these rules only apply where the contributor is related to the beneficiaries. In some cases (for example, aunts and uncles), the contributor may not be related to the beneficiary for tax purposes. To provide subscribers of separate individual plans with the same flexibility to allocate assets among siblings as exists for subscribers of family plans, the budget proposes to allow transfers between individual RESPs for siblings without tax penalties and without triggering the repayment of Canada Education Savings Grants, provided that the beneficiary of a plan receiving a transfer of assets had not attained 21 years of age when the plan was opened. These measures will apply to asset transfers that occur after 2010.
Donations of Publicly Listed Flow-Through Shares
Since March 18, 2007, Canadians have been able to donate publicly listed shares to all registered charities and receive an exemption from tax on the capital gain that would normally arise on a disposition of such securities. Taxpayers who donated publicly traded flow-through shares have been able to claim this exemption from tax, despite the fact that some part or all of the capital gain arises from the flow-through share incentives in the Income Tax Act, and not from any appreciation in market value of the underlying company. The budget proposes that donations of flow-through shares will be exempt from tax only on the portion of the capital gain that represents an increase in value from the original cost of the shares, and not on any gain resulting from the flow-through credits. This new rule will apply to shares issued pursuant to a flow-through share agreement entered into on or after March 22, 2011.
Tax on Split Income - Capital Gains
The Income Tax Act contains a number of rules intended to reduce the ability of a higher-income taxpayer to split taxable income with lower-income individuals. One of these rules, referred to as the tax on split income, taxes "split income" at the highest marginal tax rate. Currently "split income" includes taxable dividends received by a minor directly or indirectly through a partnership or trust in respect of unlisted shares of Canadian and foreign corporations and income from a partnership or trust received by a minor if that income is derived from providing property or services to a business carried on by a person related to the minor. Tax on split income did not initially apply to capital gains. The budget proposes to extend the tax on split income to include capital gains that are included in the income of a minor from a disposition of shares of a corporation to a person who does not deal at arm's length with the minor, if taxable dividends on those shares would have been subject to the split income tax. Capital gains that fall under the proposed rules will be treated as dividends, such that there will be no benefit from the capital gains exemption or the capital gains inclusion rates. This measure will apply to capital gains realized on or after March 22, 2011.
Individual Pension Plans (IPPs)
The budget proposes two new measures that will apply to IPPs. First, annual minimum amounts will be required to be withdrawn from IPPs, similar to the current Registered Retirement Income Fund minimum withdrawal rules, once the plan member attains the age of 72. This will apply to the 2012 and subsequent taxation years.
The second proposal relates to contributions made to an IPP for past years of employment. Currently the amount required to fund the IPP's obligation in relation to past service can be much greater than the amount by which the employee is required to reduce his or her RRSP assets or accumulated RRSP contribution room. The proposal requires that contributions made to an IPP for past years of employment will be required to be funded first out of a plan member's existing RRSP assets or by reducing the individual's accumulated RRSP contribution room before new deductible past contributions can be made. This measure will generally apply to IPP past service contributions made after March 22, 2011.
Employee Profit Sharing Plans (EPSPs)
EPSPs enable business owners to align the interests of their employees with those of the business by sharing the profits of their business with their employees. In recent years, the government believes that these plans have increasingly been used as a means for some business owners to direct profit participation to members of their families with the intent of reducing or deferring taxes on these profits. Some employers are also using EPSPs to avoid making CPP contributions and paying EI premiums on employee compensation. The government will review the existing rules for EPSPs to determine whether technical improvements are required.
RRSPs - Anti-Avoidance Rules
The budget proposes to enhance the existing RRSP anti-avoidance rules by introducing rules similar to the Tax-Free Savings Account (TFSA) advantage rules, prohibited investment rules and non-qualified investment rules.
The following will be considered RRSP advantages:
- Benefits from transactions that would not have occurred in a regular, open market, if it is reasonable to conclude the transactions were undertaken for a tax benefit,
- Payments made on account or in lieu of payments for services, and payments of investment income, where the income is tied to the existence of another investment,
- Benefits from asset purchase and sale transactions ("swap transactions") between RRSPs and other accounts controlled by the RRSP annuitant,
- Specified non-qualified investment income derived from non-qualified investments,
- Income (including capital gains) derived from a "prohibited investment", and
- Benefits from "RRSP strip transactions" where the RRSP annuitant or a non-arm's length person is able to use or obtain property held in connection with the RRSP without including the value in income.
The amount of tax payable in respect of any RRSP advantage will be, in the case of a benefit, the fair market value of the benefit and, in the case of a debt, the amount of the debt.
A special tax of 50% will apply to "prohibited investments" as well as to "non-qualified investments". A "prohibited investment" generally includes debt and investments in entities in which the annuitant or a non-arm's length person has a "significant interest" (generally 10% or more). "Non-qualified investments" include shares in private investment holding companies or foreign private companies, and real estate.
Generally, these new provisions will apply to transactions occurring, income earned, capital gains accruing and investments acquired after March 22, 2011.
Mineral Exploration Tax Credit (METC)
Flow-through shares allow companies to "flow through" tax expenses associated with their Canadian exploration activities to investors who can deduct the expenses in calculating their own taxable income. The METC is an additional benefit available to individuals who invest in flow-through shares equal to 15% of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors. The budget proposes to extend eligibility for the METC for one year to flow-through share agreements entered into on or before March 31, 2012.
BUSINESS TAX MEASURES
Partnerships - Deferral of Corporate Income Tax
Under current tax rules, corporate partners of partnerships can defer taxes on the earnings from those partnerships by up to one year if the partnership has a different fiscal year end than its corporate partners. Under changes introduced in 1995, individuals and professional corporations were restricted from similar tax deferral opportunities. The budget now proposes to limit these corporate deferral opportunities to ensure corporate income is subject to tax on a timely basis.
The proposed measures will apply to corporate taxation years that end after March 22, 2011. Corporations with significant interests in a partnership (a corporation that together with affiliated and related parties are entitled to more than 10% of the partnership's income) will now be required to accrue income from the partnership for the portion of the partnership's fiscal period that falls within the corporation's taxation year (referred to as the "Stub Period" and calculated using a formula). Corporations can designate an income amount that is lower, but if the designated amount is less than the lesser of the actual pro-rated income of the corporate partner from the partnership for the Stub Period and the amount determined using the formula, they will be subject to additional income inclusion rules in the following taxation year.
Because these proposed measures could result in significant additional incremental partnership income for the first corporate taxation year ending after March 22, 2011, transitional relief will allow the incremental amount to be taxed gradually over the five taxation years that follow, by way of a transitional reserve claim.
A partnership will continue to be allowed to have a fiscal period that differs from that of any of its corporate partners but as a result of these measures, some partnerships may wish to change their fiscal periods. Under certain conditions for partnerships where all members are corporations, a one-time election will enable a partnership to change its fiscal period. In addition, partnerships that are part of a tiered partnership structure will be required to have the same fiscal period but this fiscal period need not align with the taxation year of any of its corporate partners. The requirement for tiered partnerships to have a common year end is being introduced because the Stub Period Accrual Approach described above for single-tiered partnerships is not adaptable to address the tax deferral that arises in multiple-tier structures which may have both corporations and partnerships as members at various levels in the structure. In general, tiered partnerships that are not required under existing rules to have a December 31 fiscal period will be allowed a one-time election under certain conditions which will enable them to choose a common fiscal period. If no such election is filed, the common fiscal period of the partnerships in tiered partnership structures will end on December 31. With a common year-end for tiered partnerships, the Stub Period rules and transitional relief discussed above will apply.
Temporary Hiring Credit for Small Business
A temporary credit of up to $1,000 will be available to offset the increase in 2011 EI premiums over those paid in 2010. This credit will be available to employers whose total EI premiums were at or below $10,000 in 2010.
Stop-Loss Rules Extended
The stop-loss rules generally reduce the amount of a loss that a corporation realizes on a disposition of shares by the amount of tax-free dividends received, or deemed to have been received, on those shares on or before the disposition of the shares. There are certain exceptions to the rules based generally on the percentage of share ownership and the length of time the shares were held by the shareholder. Certain "tax avoidance arrangements" have been entered into which rely on the exceptions, and effectively allow for a double deduction of the loss on the redemption of shares. As a result, the budget has announced changes that will extend the stop-loss rules to include deemed dividends received on a share redemption when determining the amount of the loss restriction regardless of the exceptions noted above. This will apply to any deemed dividend received on the redemption of shares held by a corporation (whether held directly or indirectly through a partnership or trust). There will be an exception for deemed dividends on the redemption of shares of a private corporation which are held by a private corporation (other than a financial institution) directly or indirectly through a partnership or trust (other than a partnership or trust that is a financial institution). This measure will apply to redemptions that occur on or after March 22, 2011.
Manufacturing and Processing Sector: Accelerated CCA
Machinery and equipment acquired by a taxpayer, after March 18, 2007 and before 2012, primarily for use in Canada for the manufacturing or processing of goods for sale or lease is currently eligible for a temporary accelerated capital cost allowance (CCA) rate of 50% on a straight line basis (subject to the "half-year rule"). The budget proposes to extend this temporary incentive for two years to eligible machinery and equipment acquired before 2014. Machinery and equipment acquired by a taxpayer after 2013 primarily for use in Canada for the manufacturing or processing of goods for sale or lease will be eligible for a declining balance CCA rate of 30%.
Clean Energy Generation Equipment: Accelerated CCA
Class 43.2 provides accelerated CCA of 50% per year on a declining balance basis for specified clean energy generation and conservation equipment. Class 43.2 was introduced in 2005 and is currently available for assets acquired on or after February 23, 2005 and before 2020. The budget proposes to amend Class 43.2 to include equipment that is used by the taxpayer, or by a lessee of the taxpayer, to generate electrical energy in a process in which all or substantially all of the energy input is from waste heat. This measure will apply to eligible assets acquired on or after March 22, 2011 that have not been used or acquired for use before that date.
Qualifying Environmental Trusts
The Income Tax Act contains special rules for qualifying environmental trusts (QETs) which were introduced in recognition of regulatory regimes under which the operator of a mine, quarry or waste disposal site may be required to pre-fund, by means of a trust, the costs of reclaiming or restoring the site. The budget proposes to expand the range of trusts eligible for QET treatment to include trusts that are required to be established in the context of pipeline abandonment. One of the existing conditions for a trust to qualify for tax treatment as a QET is that the trust be mandated under the terms of a contract entered into with the Crown in right of Canada or a province or under a law of Canada or a province. The budget proposes to modify this condition for all QETs to include trusts that are created after 2011 and mandated by order of a tribunal (such as the National Energy Board) constituted by a law of Canada or a province. These changes will apply to the 2012 and subsequent taxation years for trusts created after 2011. In addition, the budget proposes to expand the type of eligible investments to include certain debt obligations and also proposes to set the rate of tax payable by a QET to the corporate tax rate for 2012 and subsequent taxation years.
Intangible Capital Expenses in Oil Sands Projects
The budget proposes changes that will better align the deduction rates for intangible costs in the oil sands sector with rates in the conventional oil and gas sector. Specifically, the budget proposes that the cost of oil sands leases and other oil sands resource property be treated as Canadian oil and gas property expense (COGPE) and thus be eligible for deduction at 10% per year. This change will be effective for acquisitions made on or after March 22, 2011. Proceeds from the disposition on or after this date of a taxpayer's oil sands resource property will be applied to reduce the taxpayer's cumulative Canadian development expense (CDE), or cumulative COGPE, consistent with the manner in which the cost of the property was treated by the taxpayer when acquired. These changes will also apply to oil shale property, which is treated in a manner similar to oil sands resource property.
Currently, development expenses incurred for the purpose of bringing a new oil sands mine into production in reasonable commercial quantities are treated as Canadian exploration expense (CEE), which can be deducted in full in the year incurred. The budget proposes that these expenses be treated as CDE. In recognition of the long time frames involved in developing oil sands mining projects, the current CEE treatment will be maintained for expenses incurred before March 22, 2011 and for expenses incurred before 2015 for new mines on which major construction began before March 22, 2011. For other expenses, the transition from CEE treatment to CDE treatment will be phased-in on a gradual basis.
Agri-Québec
Through the AgriInvest program, Agriculture Canada offers an incentive to encourage farmers to set aside earnings in order to provide coverage against small income declines. Under the AgriInvest program, farmers who contribute to an AgriInvest account receive matching government contributions. The government contributions and interest earned in respect of the account are not taxable until withdrawn. The province of Québec will supplement AgriInvest with the new Agri-Québec program. The budget proposes to provide the same income tax treatment to investments made under the Agri-Québec program as is provided to investments under the AgriInvest program for 2011 and subsequent taxation years.
MEASURES FOR CHARITIES
Charity Rules Extended to Other Organizations
Over the past few years, the government has been concerned with abuses of the tax rules within the charitable sector. For example, schemes involving charities issuing donation receipts for donated property with a value far in excess of the donor's cost, where the donor has purchased the property immediately prior to the donation for the express purpose of making the donation, have been investigated and prosecuted. And the government has been exercising its ability to revoke an organization's charitable status where such organizations have abused their privileges.
This budget proposes several measures to strengthen the public confidence in the charitable sector and to help ensure that more resources are available for legitimate charities by extending many of the rules that currently apply to registered charities to other organizations that can issue official donation receipts such as:
- registered Canadian amateur athletic associations (RCAAAs),
- municipalities in Canada,
- municipal and public bodies performing the function of government in Canada,
- housing corporations in Canada constituted exclusively to provide low-cost housing for the aged,
- universities outside of Canada, the student body of which ordinarily includes students from Canada, and
- certain other charitable organizations outside of Canada that have received a gift from Her Majesty in right of Canada.
The budget proposes that the following measures apply to the above listed organizations in a manner similar to the manner that they currently apply to registered charities. These new measures will apply on or after the later of January 1, 2012 or the date of Royal Assent to the enacting legislation. These organizations, referred to as qualified donees, will be required to:
- Be on the publicly available list maintained by the Canada Revenue Agency (CRA).
- Abide by the receipting rules that apply to registered charities. If organizations do not abide by these rules, the budget proposes that the CRA be authorized to suspend receipting privileges or revoke status as a qualified donee. RCAAAs will be subject to monetary penalties associated with improper issuance of receipts.
- Maintain proper books and records and provide access to such books and records to the CRA upon request. Failure to do so could result in suspension of receipting privileges or revocation of status as a qualified donee. As an additional proposal, RCAAAs will be subject to monetary penalties for failure to file an annual information return.
In addition, the budget proposes that RCAAAs will be required to have promotion of amateur athletics in Canada as their exclusive purpose and exclusive function. As this represents a significant change from the current requirement to have the promotion of amateur athletics in Canada as their primary purpose and primary function, stakeholders are invited to provide feedback by June 30, 2011 on this change. RCAAAs will still be able to engage in international events and competitions, and to carry on related business activities. In addition, the rules that currently apply to registered charities that prohibit the provision of undue benefits to any person and ensure public access to certain information of the organization will also apply to RCAAAs. The CRA will consult with stakeholders to develop administrative guidance for these new measures.
This budget proposes to give the Minister of National Revenue the discretion to refuse or revoke the registration of a registered charity or an RCAAA, or to suspend its authority to issue official donation receipts if a member of the board of directors, a trustee, an officer or equivalent official has been involved in past misconduct of a criminal nature or involving a breach of public trust, such as fraud or misrepresentation. Such past misconduct includes being involved in the previous five years as a board member, trustee or officer of a charity or RCAAA whose registration was revoked for non-compliance, or being a promoter of a gifting arrangement or other tax shelter involving a registered charity or an RCAAA, where the registration of the charity or RCAAA was revoked as a result of such involvement. These changes will apply on or after the later of January 1, 2012, or the date of Royal Assent to the enacting legislation.
Returned Gifts
In some circumstances, a donor may make a gift to a charity, the charity issues a donation receipt for the gift, and then the property is returned to the donor. Under current rules, there is no mechanism to adjust the donation receipt to reflect the fact that the donated property has been returned, or to reassess the taxpayer to reduce the amount of the donation deduction or credit. The budget proposes to require a copy of the revised donation receipt be sent to the CRA if the amount of the receipt is changed by more than $50. The budget also proposes that the government be able to reassess the taxpayer to disallow the donor's claim for a deduction or credit in any circumstance where the property is returned to the donor. This measure will apply to gifts or property returned on or after March 22, 2011.
Granting Options to Charities and Other Qualified Donees
From time to time, a donor may grant an option to a charity or other qualified donee to acquire property of the donor. The budget proposes rules to ensure that a donation is only recognized at the time that the donee exercises the option and acquires the property. In addition, the combined amount paid by the donee for the option and the property must be less than 80% of the fair market value of the optioned property at the time of acquisition of the property.
CUSTOMS TARIFF MEASURES
Simplification
The budget announced that the government is initiating a process to simplify the Customs Tariff in order to facilitate trade and lower the administrative burden for businesses. These changes include the reduction of customs processing burden for businesses, modification of the structure of the Customs Tariff and technical modernization.
Facilitating Low Value Imports
The budget proposes the introduction of three new tariff items in Chapter 98 of the Schedule to the Customs Tariff to facilitate the processing of low value non-commercial imports arriving by post or by courier.
The information in this publication is current as of March 22, 2011.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
