Posted: March 27, 2017
Similar to last year’s budget, the budget focused on providing fairness to the middle class through spending and tax changes.
The deficit reported for the 2016-17 fiscal year is $23 billion, which is lower than the deficit predicted in last year’s budget of $29.4 billion. However, the government is predicting a deficit of $28.5 billion for 2017-18 and $27.4 billion for 2018-19. No reference is made to balancing the budget in the projections released and a deficit of $18.8 billion has been predicted for the 2021-22 fiscal year which is the final year for which detailed projections were presented.
In this budget, the government highlighted that it is making investments in six economic sectors: digital, clean technology, agri-food, advanced manufacturing, bio-sciences and clean resources.
Housing was another priority area addressed today. As the largest single commitment in this budget, the government announced that it will be investing over $11 billion in support of a National Housing Strategy. The government has also committed $7 billion over the next decade to increase the number of high-quality child care spaces available across the country.
On innovation, the government will create Innovation Canada and provide funding of $950 million over five years to spur innovation through superclusters. On the infrastructure front, the government announced that it would soon propose legislation establishing the Canada Infrastructure Bank in addition to appointing the bank’s CEO, chair and board of directors. The goal is to have the bank up and running late this year.
In terms of tax changes, several credits and deductions have been eliminated. One significant change will affect professionals such as accountants, dentists, lawyers, doctors, veterinarians and chiropractors. The ability of these professionals to recognize their income on an “as billed” basis will be eliminated over a two year phase-in period.
The government also announced that it will release a discussion paper in the coming months that will deal with tax planning using private corporations. This paper will address income splitting using private companies, building portfolio investments in a private corporation and withdrawing funds from a private corporation as a capital gain as opposed to salaries or dividends.
For more details and to watch our on demand webinar discussing the changes mentioned above, visit the following link: https://www.bdo.ca/en-ca/insights/tax/federal-and-provincial-budgets/2017/federal-budget-2017/?utm_source=HomeFMA&utm_medium=Website&utm_campaign=Federal+Budget+2017+EN
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