The 2013 federal budget was released on March 21, 2013 and a number of new tax rules were proposed. During difficult economic times our government’s main focus for raising revenues was aimed at eliminating tax “loop-holes” and perceived tax advantages. A summary of the measures that will impact many of our clients include:
National Securities Regulator
The government makes it clear that it prefers to have a common securities regulator established cooperatively with provinces and territories. If the province and territories cannot agree on the terms of a common regulator, the government will propose a legislation to carry out its regulatory responsibilities consistent with the decision rendered by the Supreme Court of Canada.
Protecting Canadian Investors
New requirements for domestic banks: Canadian banks will face a higher capital requirement as well as a new bail-in’ regime, which is designed to ensure that in the unlikely an important bank depletes its capital, the bank can be recapitalized and returned to viability through rapid conversion of liabilities into capital.
Retirement
Pooled Registered Pension Plans (PRPPs): The government has now fully implemented the federal PRPP regulatory framework. The promise of the PRPP was that is would provide a new, accessible, large-scale and low-cost pension option to employers, employees and the self-employed.
Tax
Increase to Lifetime Capital Gains Exemption: Effective 2014, the Lifetime Capital Gains Exemption will be increased by $50,000 to $800,000 of capital gains realized by individuals on the disposition of qualified property and shares of a qualified small business.
Miscellaneous
– The budget proposes to make the cost of renting a safety deposit box non-deductible
– To improve neutrality, the government proposes to phase out the additional deduction against certain income earned by credit unions
– A new temporary “Super Donation Credit” is available to first-time donors of an additional 25% up to $1,000 to encourage Canadians to donate to charities
– The GST/HST exemption will be expanded to include publicly subsidized or funded personal care services rendered to seniors and to those with disabilities who require home-care services, such as bathing, feeding, help getting dressed or taking medications
– To encourage children’s fitness, tariffs on certain sports and athletic equipment (excluding bicycles) imported into Canada will be eliminated after March 31st, 2013