Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2019: part 6
Non-capital loss carry-overs
Value | |
---|---|
Description | Non-capital losses, including farm and fishing non-capital losses, may be carried back or forward and deducted against all sources of income. For losses incurred in or after 2006, the carry-back period is three years and the carry-forward period 20 years. |
Tax | Personal and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsection 111(1) |
Implementation and recent history |
|
Objective – category | To assess tax liability over a multi-year period |
Objective | This measure supports businesses and investors by reducing the risk associated with investment, and provides tax relief for cyclical businesses (Budget 1983; Budget 2004; Budget 2006). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is considered part of the benchmark tax system, and therefore is not a tax expenditure. |
Subject | Business - other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandates of Global Affairs Canada, Public Services and Procurement Canada, and the regional development agencies (among other federal organizations) also offer support to Canadian businesses in various manners. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Personal income tax: T1 Income Tax and Benefit Return Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: T1 micro-simulation model. The estimate for a given year represents the tax relief associated with the carry-forward to that year of losses incurred in prior years. Data on losses carried back to a previous year is not available. The estimates also do not include losses carried over by part-time farmers. Corporate income tax: The estimate for a given year represents the tax relief associated with both the carry-forward to that year of losses incurred in prior years and the carry-back to prior years of losses incurred in that year. The estimate is equal to the amount of losses carried over multiplied by the tax rate applicable in the year in which the losses are applied. |
Projection method | Personal income tax: T1 micro-simulation model Corporate income tax: The cost for the last historical year is grown by the projected year-over-year growth in the level of losses carried over used to offset taxable income (based on the latest economic and fiscal projections). |
Number of beneficiaries | About 41,000 individuals and 438,500 corporations made use of this measure in 2016 (not counting individuals that carried back losses only). |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Farm and fishing non-capital losses | ||||||||
Personal income tax | ||||||||
Carried back | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Applied to current year | 15 | 15 | 20 | 15 | 10 | 10 | 10 | 15 |
Total – personal income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Corporate income tax | ||||||||
Carried back | 10 | 20 | 15 | 15 | 20 | 20 | 20 | 20 |
Applied to current year | 45 | 50 | 45 | 40 | 50 | 50 | 50 | 50 |
Total – corporate income tax | 60 | 65 | 60 | 55 | 70 | 65 | 70 | 70 |
Total – farm and fishing non-capital losses | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Other non-capital losses | ||||||||
Personal income tax | ||||||||
Carried back | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Applied to current year | 65 | 70 | 75 | 65 | 65 | 65 | 70 | 70 |
Total – personal income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Corporate income tax | ||||||||
Carried back | 3,390 | 2,090 | 2,315 | 2,350 | 2,000 | 2,220 | 2,210 | 2,090 |
Applied to current year | 3,860 | 5,055 | 4,340 | 4,700 | 5,245 | 5,545 | 5,130 | 5,120 |
Total – corporate income tax | 7,255 | 7,145 | 6,655 | 7,050 | 7,240 | 7,765 | 7,340 | 7,205 |
Total – other non-capital losses | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Total – non-capital losses | ||||||||
Personal income tax | ||||||||
Carried back | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Applied to current year | 80 | 85 | 95 | 80 | 75 | 75 | 80 | 85 |
Total – personal income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Corporate income tax | ||||||||
Carried back | 3,405 | 2,110 | 2,330 | 2,365 | 2,020 | 2,240 | 2,230 | 2,105 |
Applied to current year | 3,910 | 5,100 | 4,385 | 4,740 | 5,290 | 5,595 | 5,180 | 5,170 |
Total – corporate income tax | 7,310 | 7,210 | 6,715 | 7,105 | 7,310 | 7,830 | 7,410 | 7,275 |
Total – non-capital losses | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Non-deductibility of advertising expenses in foreign media
Value | |
---|---|
Description | Expenses for advertising in non-Canadian newspapers and periodicals or on non-Canadian broadcast media cannot generally be deducted for income tax purposes if the advertising is directed primarily to a market in Canada. This treatment results in a negative tax expenditure, since the deductibility of expenses incurred to earn business income is considered to be part of the benchmark tax system. |
Tax | Personal and corporate income tax |
Beneficiaries | Businesses that advertise in foreign media |
Type of measure | Other |
Legal reference | Income Tax Act, sections 19 to 19.1 |
Implementation and recent history |
|
Objective – category | To achieve an economic objective - other |
Objective | This measure is intended to ensure that control of periodicals and newspapers remains in the hands of Canadians and supports the continued existence of a viable and original Canadian magazine industry (House of Commons Debates, vol. 3, 1965; Department of Finance Canada news release, June 19, 1995). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure disallows the deduction of an expense that is incurred to earn business income. |
Subject | Business - other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandates of Global Affairs Canada, Public Services and Procurement Canada, and the regional development agencies (among other federal organizations) also offer support to Canadian businesses in various manners. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Personal income tax: No data is available on expenses incurred by unincorporated businesses to advertise in non-Canadian media. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: No estimate is available. Corporate income tax: T2 micro-simulation model |
Projection method | Personal income tax: No projection is available. Corporate income tax: The cost of this measure is projected to grow in line with nominal gross domestic product. |
Number of beneficiaries | About 360 corporations reported non-deductible advertising expenses in 2016. No data is available for unincorporated businesses. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Corporate income tax | S | S | S | S | S | S | S | S |
Total | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Non-taxation of allowances for diplomats and other government employees posted abroad
Value | |
---|---|
Description | Diplomats and other government employees posted abroad can claim an exemption for the allowances received to cover the additional costs associated with living outside Canada. |
Tax | Personal income tax |
Beneficiaries | Diplomats and other government employees posted abroad |
Type of measure | Exemption |
Legal reference | Income Tax Act, subparagraph 6(1)(b)(iii) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure recognizes the additional costs incurred by diplomats and other government personnel employed outside Canada. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Employment |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Global Affairs Canada and National Defence data |
Estimation method | The value of this tax expenditure is estimated by multiplying total exempt allowances by the estimated marginal tax rates of recipients. |
Projection method | The projection for 2018 is based on partial year data and historical growth. Projections for 2019 and 2020 are not provided as the value of this measure cannot be reliably forecast for these years. |
Number of beneficiaries | More than 8,500 individuals received non-taxable allowances in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 25 | 25 | 25 | 30 | 30 | 30 | n.a. | n.a. |
Non-taxation of allowances for members of legislative assemblies and certain municipal officers
Value | |
---|---|
Description | Elected members of provincial and territorial legislative assemblies and of incorporated municipalities, elected officers of municipal utilities boards, commissions, corporations, or similar bodies, and members of public or separate school boards may receive allowances for expenses incident to the discharge of their duties. Such allowances are not included in income so long as they do not exceed half of the salary or other remuneration received in that capacity in the year. This exemption was repealed as of the 2019 tax year. |
Tax | Personal income tax |
Beneficiaries | Members of provincial and territorial legislative assemblies and of incorporated municipalities; elected officers of municipal utilities boards, commissions, corporations, or similar bodies; and members of public or separate school boards |
Type of measure | Exemption |
Legal reference | Income Tax Act, subsections 81(2) and (3) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure recognizes the additional costs incurred by members of legislative assemblies and certain municipal officers in the course of their duties. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Employment |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return and T4 Statement of Remuneration Paid |
Estimation method | Allowances reported on T4 slips are matched against T1 returns and incremental tax is calculated on the basis of the individual’s taxable income with and without the allowance. |
Projection method | The cost of this measure is projected to grow in line with allowances. |
Number of beneficiaries | About 25,000 individuals received non-taxable allowances in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 15 | 20 | 20 | 20 | 20 | 20 | – | – |
Non-taxation of benefits from private health and dental plans
Value | |
---|---|
Description | Employer-paid benefits for private health and dental plans are deductible business expenses but are not a taxable employee benefit. In the case of self-employed individuals, they can claim a deduction in computing income from a business for amounts paid under a private health services plan for the benefit of the individual, the individual’s spouse or common-law partner and members of the individual’s household, subject to certain restrictions. |
Tax | Personal income tax |
Beneficiaries | Employees and self-employed individuals |
Type of measure | Exemption (for employer-paid benefits); deduction (for self-employed individuals) |
Legal reference | Income Tax Act,subparagraph 6(1)(a)(i), section 18 and section 20.01 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure improves access to supplementary health and dental benefits (Budget 1998). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. This measure provides tax recognition for an expense that is not incurred to earn income. |
Subject | Health |
CCOFOG 2014 code | 7072 - Health - Outpatient services |
Other relevant government programs | Programs within the mandates of Health Canada, the Canadian Food Inspection Agency, the Canadian Institutes of Health Research, the Public Health Agency of Canada and Veterans Affairs Canada also support health-related objectives. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Canadian Life and Health Insurance Association Inc., Health Insurance Benefits in Canada and Premium & Retail Tax on Life & Health Insurance Conference Board of Canada, Benefits Benchmarking |
Estimation method | The value of this tax expenditure is calculated as the tax revenue forgone from the non-taxation of employer-provided health related insurance premiums and benefits. These amounts are estimated using statistics provided by the Canadian Health and Life Insurance Association, in conjunction with survey information from the Conference Board of Canada. The estimated number of policy holders, along with the average value of benefits, is imputed into the T1 model using survey information from Statistics Canada to reflect estimated coverage by family type and income level. If these employer-paid amounts were taxable benefits, they would be eligible expenses under the Medical Expense Tax Credit; this interaction is taken into account in the estimation of the tax expenditure. |
Projection method | T1 micro-simulation model |
Number of beneficiaries | It is estimated that about 12.9 million individuals received employer-paid health or dental benefits in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 2,520 | 2,585 | 2,580 | 2,480 | 2,615 | 2,765 | 2,910 | 3,030 |
Non-taxation of benefits in respect of home relocation loans
Value | |
---|---|
Description | The benefit associated with a home relocation loan provided to an employee by an employer was required to be included in income for tax purposes, but an offsetting deduction from net income was provided. The amount of the deduction was the lesser of the amount of the taxable benefit and the deemed interest benefit on the first $25,000 of a five-year interest-free loan. This approach effectively exempted such benefits from taxation, while ensuring that they were taken into account in determining income-tested credits and benefits. This deduction was repealed as of the 2018 taxation year. |
Tax | Personal income tax |
Beneficiaries | Employees |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 110(1)(j) |
Implementation and recent history |
|
Objective – category | To encourage employment To recognize expenses incurred to earn employment income |
Objective | This measure is intended to facilitate mobility by allowing employers to compensate relocated employees facing higher living costs at the new location (Budget 1985). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. This measure provides tax recognition for an expense that is incurred to earn employment income. |
Subject | Employment |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 1,100 individuals claimed this deduction in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | S | S | S | S | S | – | – | – |
Non-taxation of capital dividends
Value | |
---|---|
Description | A private corporation may distribute the balance of its capital dividend account to its shareholders in the form of a capital dividend. Where the corporation elects to pay this dividend from its capital dividend account, the dividend is received tax-free by the corporation’s shareholders who are resident in Canada. At any time, the capital dividend account balance generally includes the total of the excess of the non-taxable portion of capital gains over the non-deductible portion of capital losses, the non-taxable portion of gains resulting from the disposition of eligible capital property, the net proceeds of certain life insurance policies received by the corporation, and the aggregate of capital dividends received by the corporation, less the aggregate of capital dividends paid by the corporation. |
Tax | Personal and corporate income tax |
Beneficiaries | Individual and corporate investors |
Type of measure | Exemption |
Legal reference | Income Tax Act, subsections 83(2) and 89(1) |
Implementation and recent history |
|
Objective – category | To encourage or attract investment To encourage savings To support competitiveness |
Objective | This measure maintains the non-taxable treatment of certain amounts received by individuals through private corporations, similar to the treatment of those amounts received directly by the individuals. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Savings and investment |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | n/a |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of capital gains on donations of cultural property
Value | |
---|---|
Description | Certain objects certified by the Canadian Cultural Property Export Review Board as being of cultural importance to Canada are exempt from capital gains tax when disposed of by sale or donation within 24 month of certification to a cultural institution, such as a museum or art gallery, designated under the Cultural Property Export and Import Act. Recipient cultural institutions are required to hold the cultural property for at least 10 years. Such donations are also eligible for the Charitable Donation Tax Credit (for individuals) or deduction (for corporations). |
Tax | Personal and corporate income tax |
Beneficiaries | Individual and corporate donors |
Type of measure | Exemption |
Legal reference | Income Tax Act,subsections 118.1(1) and 110.1(1) and paragraph 39(1)(a)(i.1) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure preserves Canada’s artistic, historic and scientific heritage by encouraging the donation of cultural property determined to be of outstanding significance to Canada’s national heritage to designated Canadian institutions, such as museums and art galleries (Budget 1998). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Donations, gifts, charities and non-profit organizations Arts and culture |
CCOFOG 2014 code | 70829 - Recreation, culture, and religion - Cultural services |
Other relevant government programs | Many federal government entities provide direct funding to registered charities, non-profit organizations and international development associations through various programs. Programs within the mandate of Canadian Heritage also support arts and culture. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Personal income tax: Data from the Canadian Cultural Property Export Review Board and T1 Income Tax and Benefit Return. Corporate income tax: No data is available. |
Estimation method | Personal income tax: The value of this measure is estimated by multiplying the exempt capital gains by the capital gains inclusion rate and an assumed marginal tax rate. Corporate income tax: No estimate is available. |
Projection method | Personal income tax: Future donations of Canadian cultural property are projected based on a historical average. Corporate income tax: No projection is available. |
Number of beneficiaries | The Canadian Cultural Property Export Review Board issued approximately 400 certificates to individuals in 2016-17. No data is available for corporations. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 5 | 10 | 10 | 10 | 5 | 5 | 5 | 5 |
Corporate income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Total | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Donations of cultural property benefit from both the non-taxation of capital gains and the Charitable Donation Tax Credit in the case of an individual donor or the deductibility of charitable donations in the case of a corporate donor. The total tax assistance for donations of cultural property is as follows:
Total tax assistance for donations of cultural property
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Charitable Donation Tax Credit | 25 | 30 | 25 | 25 | 20 | 20 | 20 | 20 |
Deductibility of charitable donations | 3 | 10 | 20 | 5 | 5 | 10 | 10 | 10 |
Non-taxation of capital gains – personal income tax | 5 | 10 | 10 | 10 | 5 | 5 | 5 | 5 |
Non-taxation of capital gains – corporate income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Total | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Non-taxation of capital gains on donations of ecologically sensitive land
Value | |
---|---|
Description | A zero inclusion rate applies to capital gains arising from a donation of ecologically sensitive land (including a conservation easement, covenant or, in the province of Quebec, a personal servitude the rights to which the land is subject and which has a term of not less than 100 years, or a real servitude on such land) to a public conservation charity (other than a private foundation) or certain other qualified donees if the fair market value of the land is certified by the Minister of the Environment. These donations are also eligible for the Charitable Donation Tax Credit (for individuals) or deduction (for corporations). |
Tax | Personal and corporate income tax |
Beneficiaries | Individual and corporate donors |
Type of measure | Exemption |
Legal reference | Income Tax Act, subsections 110.1(1), 118.1(1) and 38(a.2), and section 207.31 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure encourages Canadians to protect ecologically sensitive land, including areas containing habitats for species at risk, by donating such property to conservation charities and certain other qualified donees (Budget 2000; Budget 2006). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Donations, gifts, charities and non-profit organizations Environment |
CCOFOG 2014 code | 70549 - Environmental protection - Protection of biodiversity and landscape |
Other relevant government programs | Many federal government entities provide direct funding to registered charities, non-profit organizations and international development associations through various programs. Programs within the mandates of Environment and Climate Change Canada, the Canadian Environmental Assessment Agency, Parks Canada and Natural Resources Canada also support environment-related objectives. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Personal income tax: Data from Environment and Climate Change Canada’s Ecological Gifts Program Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: The value of this measure is estimated by multiplying the exempt capital gains by the capital gains inclusion rate and an assumed marginal tax rate. Corporate income tax: T2 micro-simulation model |
Projection method | Personal income tax: Future donations of ecologically sensitive land are projected based on historical growth. Corporate income tax: Projections are based on the average of the last three historical years. The tax expenditure is projected to grow in line with nominal gross domestic product. |
Number of beneficiaries | This measure provided tax relief to a small number of corporations (fewer than 20) in 2016. The number of individuals who obtained tax relief is unknown; however, fewer than 100 individuals made donations of ecologically sensitive land in that year. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 2 | 2 | 1 | 3 | 2 | 2 | 2 | 2 |
Corporate income tax | 1 | 5 | S | S | 2 | 1 | 1 | 1 |
Total | 2 | 5 | 2 | 4 | 3 | 3 | 4 | 4 |
Donations of ecologically sensitive land benefit from both the non-taxation of capital gains and the Charitable Donation Tax Credit in the case of an individual donor or the deductibility of charitable donations in the case of a corporate donor. The total tax assistance for donations of ecologically sensitive land is as follows:
Total tax assistance for donations of ecologically sensitive land
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Charitable Donation Tax Credit | 5 | 5 | 5 | 10 | 5 | 10 | 10 | 10 |
Deductibility of charitable donations | 5 | 3 | 1 | 1 | 1 | 1 | 1 | 1 |
Non-taxation of capital gains – personal income tax | 2 | 2 | 1 | 3 | 2 | 2 | 2 | 2 |
Non-taxation of capital gains – corporate income tax | 1 | 5 | S | S | 2 | 1 | 1 | 1 |
Total | 15 | 15 | 5 | 15 | 10 | 15 | 15 | 15 |
Non-taxation of capital gains on donations of publicly listed securities
Value | |
---|---|
Description | A zero inclusion rate applies to capital gains arising from a donation of publicly listed securities made to a qualified donee, which effectively exempts such gains from income tax. Donations of publicly listed securities are also eligible for the Charitable Donation Tax Credit (for individuals) or deduction (for corporations). |
Tax | Personal and corporate income tax |
Beneficiaries | Individual and corporate donors |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraphs 38(a.1) and (a.4), sections 38.3 and 38.4 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure was introduced to facilitate the transfer of certain publicly listed securities to charities to help them respond to the needs of Canadians (Budget 1997). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Donations, gifts, charities and non-profit organizations |
CCOFOG 2014 code | 705 - Environmental protection; 706 - Housing and community amenities; 707 - Health; 708 - Recreation, culture, and religion; 709 - Education; 710 - Social protection; Other various codes |
Other relevant government programs | Many federal government entities provide direct funding to registered charities, non-profit organizations and international development associations through various programs. |
Source of data | Personal income tax: T1 Income Tax and Benefit Return Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: The value of this measure is estimated by multiplying the exempt capital gains on publicly listed shares by the capital gains inclusion rate and the top marginal tax rate. Corporate income tax: T2 micro-simulation model |
Projection method | Personal income tax: Projections for publicly listed securities are made based on historical donation levels and projected growth in capital gains. Corporate income tax: The tax expenditure is projected to grow in line with nominal gross domestic product. |
Number of beneficiaries | This measure provided tax relief to about 880 corporations in 2016. The number of individuals who obtained tax relief is unknown; however, about 6,000 individuals made donations of publicly listed shares in that year. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 45 | 70 | 60 | 75 | 90 | 95 | 100 | 105 |
Corporate income tax | 70 | 100 | 60 | 65 | 110 | 85 | 90 | 95 |
Total | 115 | 170 | 115 | 135 | 200 | 175 | 185 | 195 |
Donations of publicly listed securities benefit from both the non-taxation of capital gains and the Charitable Donation Tax Credit in the case of an individual donor or the deductibility of charitable donations in the case of a corporate donor. The total tax assistance for donations of publicly listed securities is as follows:
Total tax assistance for donations of publicly listed securities
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Charitable Donation Tax Credit | 145 | 240 | 190 | 240 | 295 | 310 | 330 | 345 |
Deductibility of charitable donations | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Non-taxation of capital gains – personal income tax | 45 | 70 | 60 | 75 | 90 | 95 | 100 | 105 |
Non-taxation of capital gains – corporate income tax | 70 | 100 | 60 | 65 | 110 | 85 | 90 | 95 |
Total | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Non-taxation of capital gains on principal residences
Value | |
---|---|
Description | This measure provides an exemption from tax in respect of all or a portion of a capital gain from the sale of a principal residence of an individual or personal trust. In general, certain property of an individual or personal trust may be designated as a principal residence for a taxation year where the property was ordinarily inhabited in the year by the taxpayer or a particular beneficiary of the trust or by the spouse or common-law partner, former spouse or common-law partner, or child of the taxpayer or the particular beneficiary of the trust. Properties that may be designated as a principal residence of an individual or personal trust are a housing unit, a leasehold interest in a housing unit, and in certain circumstances, shares of the capital stock of a cooperative housing corporation owned by the individual or personal trust. The exempt portion of the capital gain from the sale of a principal residence is generally determined in proportion to the fraction where one plus the number of years after 1971 that the property was owned by and designated as the principal residence of the individual or personal trust while resident in Canada is divided by the number of years after 1971 that the property was owned by the individual or personal trust. |
Tax | Personal income tax |
Beneficiaries | Individual homeowners |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 40(2)(b), definition of “principal residence”, and section 54 Income Tax Regulations, section 2301 |
Implementation and recent history |
|
Objective – category | To achieve a social objective To achieve an economic objective - other |
Objective | This measure recognizes that principal homes are generally purchased to provide basic shelter and not as an investment, and increases flexibility in the housing market by facilitating the movement of families from one principal residence to another in response to their changing circumstances (Summary of 1971 Tax Reform Legislation, 1971; Budget 1981). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Housing |
CCOFOG 2014 code | 70619 - Housing and community amenities - Housing development |
Other relevant government programs | Programs within the mandate of the Canada Mortgage and Housing Corporation, Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada are intended to promote the construction, repair and renewal of affordable and safe housing. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Data from the Multiple Listing Service and Statistics Canada |
Estimation method | The value of this tax expenditure is estimated by multiplying total net exempt capital gains by the marginal tax rate on capital gains. Total net exempt capital gains are estimated based on data and assumptions about the volume and average selling price of residential resales, the proportion of residential resales to which the measure applies, the purchase cost and length of tenure of residential resales, capital improvements made (e.g., additions and renovations), and expenses deductible in determining net capital gains (e.g., real estate commissions, legal fees). |
Projection method | Projections are based on forecasts of residential resales and average selling prices provided by the Canada Mortgage and Housing Corporation. |
Number of beneficiaries | No data is available. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 4,160 | 5,100 | 6,130 | 7,900 | 7,565 | 5,335 | 5,960 | 5,915 |
Non-taxation of certain importations
Value | |
---|---|
Description | Goods imported into Canada are generally taxable. However, a number of goods do not attract GST upon importation, including:
|
Tax | Goods and Services Tax |
Beneficiaries | Households, businesses, foreign diplomats, settlers |
Type of measure | Other |
Legal reference | Schedule VII to the Excise Tax Act Non-Taxable Imported Goods (GST/HST) Regulations |
Implementation and recent history |
|
Objective – category | To reduce administration or compliance costs To prevent double taxation To achieve an economic objective - other |
Objective | This measure is intended to simplify administration, prevent double taxation, promote tourism and ensure compliance with international convention precedents. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | The non-taxation of goods that will be consumed in Canada is a deviation from a broadly defined value-added tax base. |
Subject | International |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | n/a |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of certain non-monetary employment benefits
Value | |
---|---|
Description | Fringe benefits provided to employees by their employers are not taxed when it is not administratively feasible to determine the value of the benefit. Examples include subsidized recreational facilities offered to all employees and scramble parking. |
Tax | Personal income tax |
Beneficiaries | Employees |
Type of measure | Exemption |
Legal reference | Administrative concession |
Implementation and recent history |
|
Objective – category | To reduce administration or compliance costs |
Objective | This measure recognizes the significant administrative and compliance costs that would be incurred in taxing certain non-monetary employment benefits. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Employment |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of certain veterans' benefits
Value | |
---|---|
Description | A number of benefits paid to veterans and Canadian Armed Forces members are tax free. These include the War Veterans Allowance, Disability Pensions, the Canadian Forces Income Support Benefit, the Caregiver Recognition Benefit, and certain other amounts payable under the Pension Act (as well as pension payments from allied countries that grant similar relief), the Civilian War-related Benefits Act, the Gallantry Awards Order and section 9 of the Aeronautics Act. |
Tax | Personal income tax |
Beneficiaries | Veterans, members of the Canadian Armed Forces and their families |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraphs 81(1)(d), (d.1) and (e) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure recognizes that these benefits provide a basic level of support to veterans of Canada’s military engagements and their families (Budget 1942; New Veterans Charter, 2006). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Income support |
CCOFOG 2014 code | 70219 - Defense - Military defense |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Data from Veterans Affairs Canada |
Estimation method | The value of this tax expenditure is estimated by multiplying actual expenditures on exempt veterans’ benefits by estimates of the marginal tax rates applicable to recipients. |
Projection method | Projections for this tax expenditure are based on forecasted expenditures on exempt veterans’ benefits. |
Number of beneficiaries | More than 110,000 individuals did not include these amounts in income in 2017-18. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 255 | 240 | 230 | 220 | 205 | 195 | 190 | 180 |
Non-taxation of Guaranteed Income Supplement and Allowance benefits
Value | |
---|---|
Description | The Guaranteed Income Supplement is an income-tested benefit payable to low-income seniors as part of the Old Age Security program. There is also an income-tested Allowance that is provided to an eligible spouse, common-law partner, widow or widower aged 60 to 64. The Guaranteed Income Supplement and Allowance benefits are effectively non-taxable. Although these benefits must be included in income, an offsetting deduction from net income is provided. This approach ensures that such payments are taken into account in determining other income-tested credits and benefits. |
Tax | Personal income tax |
Beneficiaries | Low-income seniors |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 110(1)(f) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure recognizes that these income-tested payments provide a basic level of support to elderly Canadians with little income other than the Old Age Security pension (Budget 1971). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Income support Retirement |
CCOFOG 2014 code | 71029 - Social protection - Old age |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Programs within the mandate of Employment and Social Development Canada also support retirement income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | Of the approximately 2.1 million beneficiaries of the Guaranteed Income Supplement and Allowance benefits in 2016, it is estimated that about 635,000 individuals would have had an increase in net tax owing in the absence of this measure. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 140 | 145 | 155 | 175 | 200 | 215 | 225 | 235 |
Non-taxation of income earned by military and police deployed to international operational missions
Value | |
---|---|
Description | Income earned by members of the Canadian Armed Forces and police officers deployed on international operational missions must be included in income for tax purposes, but an offsetting deduction from net income is provided. This approach effectively exempts such income from taxation, while ensuring that it is taken into account in determining income-tested credits and benefits. |
Tax | Personal income tax |
Beneficiaries | Members of the Canadian Armed Forces and police officers deployed on international operational missions |
Type of measure | Exemption |
Legal reference | Income Tax Act, subparagraph 110(1)(f)(v) Income Tax Regulations, section 7500 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure is intended to provide special recognition for Canadian Armed Forces personnel and police serving their country on international operational missions (Budget 2004; National Defence news release NR-04.028, April 14, 2004; National Defence news release, May 18, 2017). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Employment |
CCOFOG 2014 code | 70219 - Defense - Military defense 70319 - Public order and safety - Police services |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Data from National Defence,the Royal Canadian Mounted Police, and the Canada Revenue Agency. |
Estimation method | The value of this measure is estimated by multiplying total exempt earnings by an estimate of the marginal tax rate of the individuals that benefit from this measure. The estimates and projection are calculated based on administrative data from the Canada Revenue Agency and National Defence. |
Projection method | Outer-year projections are not provided as the value of this measure cannot be reliably forecast for these years. |
Number of beneficiaries | Fewer than 3,500 individuals received tax-deductible income in respect of international high- or moderate-risk operational missions in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 15 | 5 | 10 | 15 | 40 | 35 | n.a. | n.a. |
Non-taxation of investment income on certain amounts received as damages in respect of personal injury or death
Value | |
---|---|
Description | Amounts received in respect of damages for personal injury or death, as well as awards paid pursuant to the authority of criminal injury compensation laws, are not taxable. In addition, investment income earned on personal injury awards is excluded from income until the end of the year in which the person reaches the age of 21. While the benchmark definition of income excludes amounts received as damages for personal injury or death (since they compensate taxpayers for a personal loss), it includes investment income earned on these amounts as part of this benchmark tax base. Thus, the non-taxation of investment income earned on these awards for those under age 22 is considered to be a tax expenditure. |
Tax | Personal income tax |
Beneficiaries | Individuals |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraphs 81(1)(g.1) and (g.2) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure provides assistance to young persons receiving personal injury awards. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Income support |
CCOFOG 2014 code | 71099 - Social protection - Social protection not elsewhere classified |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of life insurance companies' foreign income
Value | |
---|---|
Description | The income earned by a life insurer resident in Canada from an insurance business carried on in a country other than Canada is not subject to federal income tax in Canada. |
Tax | Corporate income tax |
Beneficiaries | Life insurance corporations |
Type of measure | Exemption |
Legal reference | Income Tax Act, subsection 138(2) Income Tax Regulations, sections 2400 to 2412 |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances To prevent double taxation |
Objective | In recognition that other jurisdictions do not necessarily tax life insurance companies on the same basis as Canadian tax rules, this measure helps ensure that Canadian multinational life insurance companies are not adversely affected in foreign insurance markets by exempting their foreign income from tax in Canada (Budget 1977). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | International |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | n/a |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of lottery and gambling winnings
Value | |
---|---|
Description | Lottery and gambling winnings are generally not subject to income tax unless, in the case of gambling winnings, the amounts are earned by the taxpayer through carrying on a business. |
Tax | Personal income tax |
Beneficiaries | Individuals with lottery or gambling winnings |
Type of measure | Exemption |
Legal reference | Income Tax Act, section 3, paragraph 40(2)(f) and subsection 52(4) |
Implementation and recent history |
|
Objective – category | To implement intergovernmental tax arrangements |
Objective | This measure reflects the agreement by the federal government to not tax this revenue in favour of the provinces. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is considered part of the benchmark tax system, and therefore is not a tax expenditure. |
Subject | Intergovernmental tax arrangements |
CCOFOG 2014 code | n/a |
Other relevant government programs | n/a |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of non-profit organizations
Value | |
---|---|
Description | A non-profit organization that is a club, society or association that is not a charity and that is organized and operated exclusively for social welfare, civic improvement, pleasure or for any other purpose except profit, qualifies for an exemption from income tax if it meets certain conditions. To be eligible, it is generally required that no part of the income of the organization be payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder of the organization. The exemption applies to both incorporated and unincorporated organizations. A tax expenditure results to the extent that the organization has income that would otherwise be taxable, such as investment income or profits from commercial activities. |
Tax | Personal and corporate income tax |
Beneficiaries | Non-profit organizations |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 149(1)(l) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure provides tax relief for non-profit organizations in recognition of the important role they play in Canadian society. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax certain taxpayers. |
Subject | Donations, gifts, charities and non-profit organizations |
CCOFOG 2014 code | 705 - Environmental protection; 706 - Housing and community amenities; 707 - Health; 708 - Recreation, culture, and religion; 709 - Education; 710 - Social protection; Other various codes |
Other relevant government programs | Many federal government entities provide direct funding to registered charities, non-profit organizations and international development associations through various programs. |
Source of data | T1044 Non-Profit Organization (NPO) Information Return T2 Corporation Income Tax Return |
Estimation method | Net income of non-profit organizations is estimated based on a presumed market rate of return on the organization’s net assets. It is assumed that that income, in the absence of the tax exemption, would be subject to the same average effective tax rates as those of typical taxable corporations. This represents a lower bound estimate. |
Projection method | The cost of this measure is projected based on the estimated growth of nominal gross domestic product and the average yield on 10-year benchmark bonds. |
Number of beneficiaries | About 26,300 non-profit organizations with positive net assets filed a T1044 return in 2015. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Total – personal and corporate income tax | 100 | 110 | 70 | 60 | 90 | 120 | 155 | 170 |
Non-taxation of payments to Canadian Armed Forces members and veterans in respect of pain and suffering
Value | |
---|---|
Description | The Disability Award provides injured Canadian Armed Forces members or veterans with an award for an injury or illness resulting from military service. The Critical Injury Benefit is a lump-sum award that addresses the immediate impacts of the most severe and traumatic service-related injuries or diseases sustained by Canadian Armed Forces members. Starting in 2019, the Pain and Suffering Compensation and the Additional Pain and Suffering Compensation are payments for life to recognize pain and suffering caused by a service-related disability. All these payments are exempt from income tax, as they are analogous to amounts received in respect of damages for personal injury. The benchmark definition of income excludes amounts received as damages since they compensate taxpayers for a personal loss. |
Tax | Personal income tax |
Beneficiaries | Veterans, members of the Canadian Armed Forces and their families |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 81(1)(d.1) |
Implementation and recent history |
|
Objective – category | Other |
Objective | This measure recognizes that these benefits provide a basic level of support to veterans of Canada’s military engagements and their families (New Veterans Charter, 2005). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is considered part of the benchmark tax system, and therefore is not a tax expenditure. |
Subject | Other |
CCOFOG 2014 code | 71012 - Social protection - Sickness and disability - Disability 70219 - Defense - Military defense |
Other relevant government programs | n/a |
Source of data | Data from Veterans Affairs Canada |
Estimation method | The value of this tax expenditure is estimated by multiplying actual expenditures on veterans’ Disability Awards and Critical Injury Benefits by estimates of the marginal tax rates applicable to recipients. |
Projection method | Projections for this tax expenditure are based on forecasted expenditures on veterans’ Disability Awards and Critical Injury Benefits. |
Number of beneficiaries | There were about 70,000 active Disability Award beneficiaries in 2017-18, although these were not necessarily in receipt of an Award payment in the particular year. Only a small number of individuals received Critical Injury Benefits. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 115 | 115 | 155 | 170 | 345 | 345 | 250 | 170 |
Non-taxation of personal property of status Indians and Indian bands situated on reserve
Value | |
---|---|
Description | Section 87 of the Indian Act exempts the personal property of status Indians and Indian bands from direct taxation if that property is situated on a reserve. Courts have held that the term “personal property” includes income. Determining whether income is situated on a reserve requires an examination of the factors that connect it to a reserve. Such connecting factors include the location (on or off a reserve) of the residence of the status Indian, the location at which the employment duties were performed and the location of other income-earning activities. In respect of the GST, the exemption applies if a status Indian makes a purchase of a good or service on a reserve, or if goods are purchased off-reserve by a status Indian and are delivered to a reserve by the vendor or vendor’s agent. |
Tax | Personal income tax Goods and Services Tax |
Beneficiaries | Status Indians and Indian bands on reserve |
Type of measure | Exemption |
Legal reference | Indian Act, section 87 Income Tax Act, paragraph 81(1)(a) |
Implementation and recent history |
|
Objective – category | Other |
Objective | This measure reflects provisions under section 87 of the Indian Act. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax certain taxpayers. |
Subject | Other |
CCOFOG 2014 code | n/a |
Other relevant government programs | n/a |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of provincial assistance for venture investments in small businesses
Value | |
---|---|
Description | As a general rule, a taxpayer receiving government assistance (such as a provincial tax credit) for the purchase of an asset would need to either: (i) reduce the adjusted cost base of the asset such that when the asset is disposed of at a profit, taxes are payable on the portion of the gain that originates from the government assistance; or (ii) include the amount of the provincial assistance in income. This measure, however, ensures that a taxpayer who receives assistance from a provincial government to purchase the shares of a prescribed venture capital corporation is not subject to either of these income inclusion provisions. |
Tax | Personal and corporate income tax |
Beneficiaries | Individual and corporate investors |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 12(1)(x) Income Tax Regulations, sections 6700, 6702 and 7300 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure supports investments in prescribed venture capital corporations that provide small businesses with capital and professional management support. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Business - small businesses |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandate of Innovation, Science and Economic Development Canada also support small businesses. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of RCMP pensions and other compensation in respect of injury, disability or death
Value | |
---|---|
Description | Pension payments or compensation received in respect of an injury, disability or death associated with the service of a member in the Royal Canadian Mounted Police (RCMP) are exempt from tax. |
Tax | Personal income tax |
Beneficiaries | RCMP members and their families |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 81(1)(i) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure recognizes that these benefits represent, to a large extent, compensation to members of Canada’s national police force and their families for a loss suffered by members in the course of their duties. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Income support Employment |
CCOFOG 2014 code | 71011 - Social protection - Sickness and disability - Sickness 71012 - Social protection - Sickness and disability - Disability 71039 - Social protection - Survivors |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Public Accounts of Canada |
Estimation method | The value of this measure is estimated based on amounts paid to compensate members of the RCMP for injuries received in the performance of duty, as reported in the Public Accounts. |
Projection method | The projection is based on the historical trend in the value of payments. |
Number of beneficiaries | More than 14,000 individuals did not include these amounts in income in 2017-18. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 20 | 25 | 25 | 30 | 35 | 35 | 40 | 40 |
Non-taxation of registered charities
Value | |
---|---|
Description | Registered charities, both incorporated and unincorporated, are exempt from income tax. Registered charities include charitable organizations, public foundations and private foundations. A tax expenditure results to the extent that the charity has income that would otherwise be taxable, such as investment income or profits from certain commercial activities. |
Tax | Personal and corporate income tax |
Beneficiaries | Registered charities |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 149(1)(f) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure provides tax relief for registered charities in recognition of the important role they play in Canadian society (The Tax Treatment of Charities, Discussion Paper, June 23, 1975). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax certain taxpayers. |
Subject | Donations, gifts, charities and non-profit organizations |
CCOFOG 2014 code | 705 - Environmental protection; 706 - Housing and community amenities; 707 - Health; 708 - Recreation, culture, and religion; 709 - Education; 710 - Social protection; Other various codes |
Other relevant government programs | Many federal government entities provide direct funding to registered charities, non-profit organizations and international development associations through various programs. |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of social assistance benefits
Value | |
---|---|
Description | Social assistance payments generally must be included in income for tax purposes, but an offsetting deduction from net income is provided. This approach effectively exempts such benefits from taxation, while ensuring that they are taken into account in determining income-tested credits and benefits. Some other forms of benefits (e.g., payments to foster parents, benefits in kind) are not included in income, and are therefore exempt from taxation. If an individual lived with a spouse or common-law partner when the payments were received, the person with the higher net income must report all of the payments. |
Tax | Personal income tax |
Beneficiaries | Low-income individuals |
Type of measure | Exemption |
Legal reference | Income Tax Act, paragraph 110(1)(f) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure recognizes the nature of social assistance as a payment of last resort (Budget 1981). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Income support |
CCOFOG 2014 code | 71099 - Social protection - Social protection not elsewhere classified |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model. The estimates do not include the non-taxation of social assistance benefits that are not included in income. |
Projection method | T1 micro-simulation model |
Number of beneficiaries | Of the approximately 1.6 million individuals who reported having received social assistance payments in 2016, it is estimated that about 406,000 individuals would have had an increase in net tax owing in the absence of this measure. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 190 | 205 | 230 | 240 | 265 | 285 | 300 | 315 |
Non-taxation of strike pay
Value | |
---|---|
Description | Most payments of the type commonly referred to as strike pay that are received from a member’s union are not taxable. |
Tax | Personal income tax |
Beneficiaries | Union members |
Type of measure | Exemption |
Legal reference | Strike pay is not a source of income under the Income Tax Act. |
Implementation and recent history |
|
Objective – category | To implement a judicial decision |
Objective | Strike pay is non-taxable by virtue of the Supreme Court of Canada’s determination that it is not income from a source. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is considered part of the benchmark tax system, and therefore is not a tax expenditure. |
Subject | Employment |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Non-taxation of up to $10,000 of death benefits
Value | |
---|---|
Description | Up to $10,000 of the total death benefit paid by a deceased person’s employer or former employer in respect of the deceased person’s employment service is exempt from tax in the hands of recipient individuals. The excess must be included in the recipients’ income. |
Tax | Personal income tax |
Beneficiaries | Individuals receiving death benefits |
Type of measure | Exemption |
Legal reference | Income Tax Act, subparagraph 56(1)(a)(iii) and subsection 248(1), definition of “death benefit” |
Implementation and recent history |
|
Objective – category | To achieve a social objective To provide income support or tax relief |
Objective | This measure alleviates the hardship faced by dependants upon the death of a supporting individual (Budget 1959). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Families and households Income support |
CCOFOG 2014 code | 71039 - Social protection - Survivors |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Indigenous Services Canada also support Canadian families and households. Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T4A Statement of Pension, Retirement, Annuity, and Other Income |
Estimation method | An estimate of forgone tax revenue is calculated by multiplying the exempt portion of death benefits paid in a year by the average marginal tax rate of individuals receiving such amounts. |
Projection method | The projection assumes no growth in exempt death benefit amounts. |
Number of beneficiaries | About 7,000 death benefits were paid in 2016. The number of individuals who benefited from the non-taxation of a portion of the death benefit in that year is unknown. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 5 | 5 | 5 | 5 | 5 | 5 | 5 | 5 |
Non-taxation of workers' compensation benefits
Value | |
---|---|
Description | Compensation received under the employees’ or workers’ compensation law of Canada or a province in respect of an injury, disability or death must generally be included in income, but an offsetting deduction for the purposes of the calculation of taxable income is provided. This approach effectively exempts such benefits from taxation, while ensuring that they are taken into account in determining income-tested credits and benefits. |
Tax | Personal income tax |
Beneficiaries | Employees |
Type of measure | Exemption |
Legal reference | Income Tax Act, subparagraph 110(1)(f)(ii) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure provides assistance to workers suffering on-the-job injuries. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Income support Employment |
CCOFOG 2014 code | 71012 - Social protection - Sickness and disability - Disability 71099 - Social protection - Social protection not elsewhere classified |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Veterans Affairs Canada also support income security. Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 575,000 individuals reported having received workers’ compensation benefits in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 620 | 645 | 630 | 640 | 665 | 670 | 675 | 675 |
Northern Residents Deductions
Value | |
---|---|
Description | Individuals residing in prescribed areas in Canada for a specified period may claim the Northern Residents Deductions. Two different deductions can be claimed: a residency deduction of up to $22 a day, and a deduction for two employer-provided vacation trips per year and unlimited employer-provided medical travel. Residents of the Northern Zone are eligible for the full deductions, while residents of the Intermediate Zone are eligible for half of the deductions. |
Tax | Personal income tax |
Beneficiaries | Individuals residing in prescribed areas in the North |
Type of measure | Deduction |
Legal reference | Income Tax Act, section 110.7 Income Tax Regulations, sections 7303.1 and 7304 |
Implementation and recent history |
|
Objective – category | To encourage employment |
Objective | This measure assists in drawing skilled labour to northern and isolated communities (Budget 1986; Budget 2008). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is not incurred to earn income. |
Subject | Employment |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 256,000 individuals claimed these deductions in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 175 | 180 | 180 | 220 | 225 | 230 | 235 | 240 |
Overseas Employment Tax Credit
Value | |
---|---|
Description | An employee who was a resident of Canada and was employed outside Canada for more than six consecutive months by a person resident in Canada (or a foreign affiliate of such a person) in connection with the exploration for, or exploitation of, certain natural resources, with construction, installation, engineering or agricultural activities or with activities performed under a contract with the United Nations was able to claim a non-refundable tax credit equal to the federal income tax otherwise payable on 20% (for 2015) of his or her foreign employment income (80% before 2013), up to a maximum foreign employment income of $100,000. Budget 2012 announced the phase-out of this measure by 2016 (see details below). |
Tax | Personal income tax |
Beneficiaries | Employees working abroad |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, section 122.3 Income Tax Regulations, sections 3400 and 6000 |
Implementation and recent history |
|
Objective – category | To support competitiveness |
Objective | This measure promoted the competitiveness of Canadian firms in certain sectors in bidding for overseas contracts by offering tax treatment comparable to that provided by other countries (Budget 1979; Budget 1983; Budget 2012). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | Tax credits are treated as deviations from the benchmark tax system. |
Subject | Employment International |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 3,900 individuals claimed this credit in 2015. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 55 | 40 | 25 | – | – | – | – | – |
Partial deduction of and partial input tax credits for meals and entertainment
Value | |
---|---|
Description | The deductibility of meals and entertainment expenses in computing business income for income tax purposes is limited to 50% of the expenses incurred. This limit is increased to 80% in the case of meal expenses incurred by long-haul truck drivers. Similarly, 50% of the GST paid by businesses on meals and entertainment, increased to 80% in the case of meals consumed by long-haul truck drivers, can be claimed as input tax credits by GST registrants. |
Tax | Personal and corporate income tax Goods and Services Tax |
Beneficiaries | Businesses |
Type of measure | Deduction; input tax credit |
Legal reference | Income Tax Act, section 67.1 Excise Tax Act, section 236 |
Implementation and recent history |
|
Objective – category | n/a |
Objective | n/a |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | Meals and entertainment expenses that are incurred by businesses for the purpose of earning business income may be viewed as also having an element of personal consumption. A tax expenditure would arise to the extent that a deduction is granted for the personal consumption portion of meals and entertainment expenses, or that an input tax credit is granted for the GST paid in respect of that portion. However, the personal consumption portion of meals and entertainment expenses cannot be determined, therefore it is not known the extent to which the partial deduction and input tax credits for meals and entertainment expenses depart from the benchmark tax system. |
Subject | Business - other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandates of Global Affairs Canada, Public Services and Procurement Canada, and the regional development agencies (among other federal organizations) also offer support to Canadian businesses in various manners. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return T2 Corporation Income Tax Return |
Estimation method | The estimates are based on actual expenses incurred by individuals and businesses. The estimates are an upper bound, as they assume that all meal and entertainment expenses are incurred for personal consumption. |
Projection method | The personal income tax component of this measure is projected using the T1 micro-simulation model; the corporate income tax component is projected to grow in line with corporate profits. The GST component is projected based on the income tax projections. |
Number of beneficiaries | This measure provided tax relief to about 811,000 individuals and 838,000 corporations in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 200 | 200 | 210 | 215 | 215 | 220 | 225 | 225 |
Corporate income tax | 275 | 295 | 295 | 310 | 330 | 345 | 320 | 315 |
Goods and Services Tax | 160 | 165 | 170 | 175 | 185 | 190 | 195 | 200 |
Total | 630 | 660 | 680 | 700 | 730 | 755 | 735 | 740 |
Partial inclusion of capital gains
Value | |
---|---|
Description | Only half of net realized capital gains are included in income. |
Tax | Personal and corporate income tax |
Beneficiaries | Individuals and corporations |
Type of measure | Exemption |
Legal reference | Income Tax Act, section 38 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment To encourage savings To support competitiveness |
Objective | This measure provides incentives to Canadians to save and invest, and ensures that Canada’s treatment of capital gains is broadly comparable to that of other countries (Proposals for Tax Reform, 1969; The White Paper: Tax Reform 1987; Budget 2000; 2000 Economic Statement and Budget Update). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Savings and investment |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | n/a |
Source of data | Personal income tax: T1 Income Tax and Benefit Return Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: T1 micro-simulation model Corporate income tax: T2 micro-simulation model |
Projection method | Personal income tax: T1 micro-simulation model Corporate income tax: Projections are based on the Department of Finance Canada’s forecast for the growth of taxable capital gains. |
Number of beneficiaries | About 2.7 million individuals and 208,000 corporations reported capital gains in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 4,115 | 5,580 | 5,730 | 6,250 | 8,575 | 7,455 | 7,845 | 8,250 |
Corporate income tax | 4,550 | 5,395 | 6,205 | 6,660 | 10,005 | 8,660 | 8,835 | 8,965 |
Total | 8,670 | 10,975 | 11,935 | 12,905 | 18,585 | 16,115 | 16,675 | 17,215 |
Partial inclusion of U.S. Social Security benefits
Value | |
---|---|
Description | Individuals who are resident in Canada and receiving U.S. Social Security benefits since before 1996 (and their surviving spouses and common-law partners who are eligible to receive survivor benefits) can deduct 50% of those benefits in computing income. Other recipients of U.S. Social Security benefits can deduct 15% of the benefits received. |
Tax | Personal income tax |
Beneficiaries | Seniors |
Type of measure | Exemption |
Legal reference | Income Tax Act, section 110(1)(h) Canada-United States Tax Convention, article XVIII, paragraph 5(a) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief |
Objective | This measure increases from 15% to 50% the percentage of U.S. Social Security payments that Canadian residents who have received such benefits since before January 1, 1996 can exclude from their taxable income in order to exempt the same proportion of U.S. Social Security benefits that the U.S. exempted before 1996. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure exempts from tax income or gains that are included in a comprehensive income tax base. |
Subject | Retirement |
CCOFOG 2014 code | 71029 - Social protection - Old age |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support retirement income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | No reliable data is available for this measure. As such, estimates and projections are no longer presented. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Patronage dividend deduction
Value | |
---|---|
Description | Cooperatives, as well as ordinary corporations, can deduct payments made to customers and suppliers in proportion to their volume of business. These payments, called “patronage dividends,” are unlike regular dividends, which are paid to investors in proportion to equity shareholdings and are not deductible for income tax purposes. Patronage dividends may not be deducted if paid to non-arm's length persons, except when the payer is a co-operative or a credit union. Patronage dividends, other than those in respect of consumer goods or services, are included in the recipient’s income in the year received. |
Tax | Corporate income tax |
Beneficiaries | Corporations |
Type of measure | Deduction |
Legal reference | Income Tax Act, section 135 |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn business or property income To prevent double taxation |
Objective | This measure reflects the view that patronage dividends are a form of customer rebate or a type of supplier incentive, and as such should be deductible as other business expenses. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is considered part of the benchmark tax system, and therefore is not a tax expenditure. |
Subject | Business - other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandates of Global Affairs Canada, Public Services and Procurement Canada, and the regional development agencies (among other federal organizations) also offer support to Canadian businesses in various manners. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T2 Corporation Income Tax Return |
Estimation method | T2 micro-simulation model. The value of this measure is an upper bound estimate as it does not take into account any income inclusion made by the recipient of the patronage dividend. |
Projection method | The value of this measure is projected to grow in line with corporate profits. |
Number of beneficiaries | About 760 corporations claimed this deduction in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Corporate income tax | 220 | 220 | 170 | 155 | 195 | 205 | 190 | 190 |
Patronage dividends paid as shares by agricultural cooperatives
Value | |
---|---|
Description | While patronage dividends not in respect of consumer goods and services are generally taxable when received, members of an agricultural cooperative are permitted to defer paying tax on a patronage dividend paid by the cooperative in the form of an eligible share until the disposition (or deemed disposition) of the share. In addition, when an eligible agricultural cooperative pays a patronage dividend to a member in the form of an eligible share, the withholding obligation in respect of the patronage dividend is deferred until the share is redeemed. In general terms, in order to issue eligible shares, agricultural cooperatives must be established in Canada and have as their principal business activity farming or the provision of goods or services required for farming in Canada. In order to be an eligible share, the share must be issued after 2005 and before 2021, and generally must not be redeemable or retractable within five years of its issue. |
Tax | Personal and corporate income tax |
Beneficiaries | Members of agricultural cooperatives |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 135.1 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | The objective of this measure is to aid the capitalization of agricultural cooperatives (Budget 2005). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure permits the deferral of the recognition of income or gains for income tax purposes. |
Subject | Business - farming and fishing |
CCOFOG 2014 code | 70421 - Economic affairs - Agriculture, forestry, fishing, and hunting - Agriculture |
Other relevant government programs | Programs within the mandates of Agriculture and Agri-Food Canada and Fisheries and Oceans Canada also support the farming and fishing sectors. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T2 Corporation Income Tax Return |
Estimation method | This tax expenditure is calculated by multiplying the reported amount of patronage dividends paid as shares by agricultural cooperatives by the average marginal personal income tax rate for farmers. |
Projection method | The cost of this tax expenditure is fairly stable; as such no growth is assumed over the projection period. |
Number of beneficiaries | This measure provided tax relief to about 40 corporations in 2016. No data is available for unincorporated agricultural cooperatives. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1 | 1 | S | 2 | 2 | 1 | 1 | 1 |
Corporate income tax | 3 | 3 | S | 5 | 4 | 4 | 4 | 4 |
Total | 4 | 4 | S | 5 | 5 | 5 | 5 | 5 |
Pension Income Credit
Value | |
---|---|
Description | The Pension Income Credit is a non-refundable credit that provides tax relief to taxpayers receiving eligible pension income. The value of the credit is calculated by applying the lowest personal income tax rate to the first $2,000 of eligible pension income. Any unused portion of the credit may be transferred to a spouse or common-law partner. Eligible pension income is generally limited to certain types of income from registered plans, such as a lifetime pension from a Registered Pension Plan and, for individuals who are age 65 or over, income from a Pooled Registered Pension Plan, a Registered Retirement Savings Plan annuity, a Registered Retirement Income Fund or a Life Income Fund. Variable benefits payments from a defined contribution Registered Pension Plan are also eligible for individuals who are age 65 or over. Veterans’ Retirement Income Security Benefit payments and Income Replacement Benefit payments are also eligible for the credit. |
Tax | Personal income tax |
Beneficiaries | Seniors and pensioners receiving eligible pension income |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, subsections 118(3) and (7) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief To achieve a social objective |
Objective | This measure was introduced to provide additional protection against inflation for the retirement income of elderly Canadians (Budget November 1974). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | Tax credits are treated as deviations from the benchmark tax system. The tax benefit from this measure is transferable between spouses or common-law partners. |
Subject | Retirement |
CCOFOG 2014 code | 71029 - Social protection - Old age |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support retirement income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 5.1 million individuals claimed this credit in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1,100 | 1,135 | 1,170 | 1,190 | 1,225 | 1,265 | 1,305 | 1,340 |
Pension income splitting
Value | |
---|---|
Description | Canadian residents receiving income that qualifies for the Pension Income Credit can allocate up to one-half of that income to their resident spouse or common-law partner for income tax purposes. Income that is eligible for the Pension Income Credit and pension income splitting is generally limited to certain types of income from registered plans, such as a lifetime pension from a Registered Pension Plan and, for individuals who are age 65 or over, income from a Pooled Registered Pension Plan, a Registered Retirement Savings Plan annuity, a Registered Retirement Income Fund or a Life Income Fund. Variable benefits payments from a defined contribution Registered Pension Plan are also eligible only for individuals who are age 65 or over. Income from a Retirement Compensation Arrangement (which is not eligible for the Pension Income Credit), as well as veterans’ Retirement Income Security Benefit payments and Income Replacement Benefit payments, also qualify for pension income splitting for individuals who are age 65 or over, subject to specified conditions. |
Tax | Personal income tax |
Beneficiaries | Seniors and pensioners receiving eligible pension income |
Type of measure | Other |
Legal reference | Income Tax Act, section 60.03 |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief To extend or modify the unit of taxation |
Objective | This measure recognizes the special challenges of planning and managing retirement income, and provides targeted assistance to pensioners (Tax Fairness Plan, 2006). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure extends the unit of taxation. |
Subject | Retirement |
CCOFOG 2014 code | 71029 - Social protection - Old age |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support retirement income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 1.3 million couples split pension income in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1,065 | 1,145 | 1,165 | 1,135 | 1,165 | 1,260 | 1,355 | 1,455 |
Political Contribution Tax Credit
Value | |
---|---|
Description | Individuals who make monetary contributions to a registered party, a registered association or a candidate as defined in the Canada Elections Act can claim the Political Contribution Tax Credit in respect of their contributions. This non-refundable credit is calculated as 75% of the first $400 contributed, 50% of the next $350 contributed, and 33â…“% of the next $525 contributed. The maximum credit available is $650. |
Tax | Personal income tax |
Beneficiaries | Individuals |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, subsection 127(3) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure encourages broad citizen participation in the electoral process. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | Tax credits are treated as deviations from the benchmark tax system. |
Subject | Social |
CCOFOG 2014 code | 70111 - General public services - Executive and legislative organs, financial and fiscal affairs, external affairs - Executive and legislative organs |
Other relevant government programs | Programs within the mandates of Canadian Heritage, Immigration, Refugees and Citizenship Canada, Transport Canada and Public Safety Canada (among other departments) also support various other social objectives. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return Data from Elections Canada |
Estimation method | T1 micro-simulation model |
Projection method | Projections for this measure are derived using Elections Canada data and a T1 micro-simulation model. These projections take into account observed trends in political donations around federal election years. |
Number of beneficiaries | About 147,000 individuals claimed this credit in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 25 | 30 | 55 | 25 | 25 | 25 | 45 | 25 |
Pooled Registered Pension Plans
Value | |
---|---|
Description | A Pooled Registered Pension Plan (PRPP) is a type of pension plan that is similar to a defined contribution Registered Pension Plan. A deferral of tax is provided on savings in a PRPP in order to encourage and assist Canadians to save for retirement. Contributions to a PRPP are deductible from income, the investment income is not taxed as it accrues in the plan, and withdrawals and benefit payments are included in income for tax purposes. Contributions to PRPPs must be made within a PRPP member’s available Registered Retirement Savings Plan contribution limit. |
Tax | Personal income tax |
Beneficiaries | Individuals with available RRSP contribution room |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 147.5 |
Implementation and recent history |
|
Objective – category | To encourage savings |
Objective | Consistent with tax assistance provided on savings in Registered Pension Plans and Registered Retirement Savings Plans, this measure encourages and assists Canadians to arrange for their financial security in later years. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure permits the deferral of the recognition of income or gains for income tax purposes. |
Subject | Retirement Savings and investment |
CCOFOG 2014 code | 71029 - Social protection - Old age |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support retirement income security. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | n/a |
Estimation method | n/a |
Projection method | n/a |
Number of beneficiaries | No data is available. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | – | – | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Note: The tax expenditure associated with this measure is combined with the tax expenditure associated with Registered Retirement Savings Plans (see measure “Registered Retirement Savings Plans”). |
Preferential tax rate for small businesses
Value | |
---|---|
Description | The first $500,000 of annual income earned by a Canadian-controlled private corporation (CCPC) from an active business carried on in Canada is taxed at a preferential federal corporate income tax rate of 9% (as of January 1, 2019). The $500,000 annual small business limit must be shared by a CCPC with other CCPCs with which it is associated. In order to target the preferential tax rate to small businesses, the annual small business limit is gradually reduced when:
The annual small business limit is the lesser of the two reduced amounts. |
Tax | Corporate income tax |
Beneficiaries | Small Canadian-controlled private corporations |
Type of measure | Preferential tax rate |
Legal reference | Income Tax Act, section 125 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment To support business activity |
Objective | This measure allows small businesses to retain more of their earnings to reinvest and create jobs (Budget 2015). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | The applicable tax rate departs from the benchmark tax rate. |
Subject | Business - small businesses |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandate of Innovation, Science and Economic Development Canada also support small businesses. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T2 Corporation Income Tax Return |
Estimation method | T2 micro-simulation model |
Projection method | The cost of this measure is projected to grow in line with corporate profits. A rate of 10.5% is used for projection years. |
Number of beneficiaries | This measure provided tax relief to about 762,000 corporations in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Corporate income tax | 2,950 | 3,105 | 3,260 | 3,750 | 4,020 | 4,590 | 5,585 | 5,575 |
Public Transit Tax Credit
Value | |
---|---|
Description | A non-refundable tax credit was available at the lowest personal income tax rate for the cost of monthly public transit passes or passes of longer duration. The credit could be claimed by the individual or the individual’s spouse or common-law partner in respect of eligible transit costs of the individual, the individual’s spouse or common-law partner, and the individual’s children who were under 19 years of age. This credit was eliminated, effective for transit use after June 30, 2017. |
Tax | Personal income tax |
Beneficiaries | Individuals |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, section 118.02 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure is intended to encourage public transit use, as increasing public transit use will ease traffic congestion in urban areas and improve the environment (Budget 2006). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | Tax credits are treated as deviations from the benchmark tax system. The tax benefit from this measure is transferable between spouses or common-law partners. |
Subject | Environment Social |
CCOFOG 2014 code | 70456 - Economic affairs - Transport - Public Transit 70539 - Environmental protection - Pollution abatement |
Other relevant government programs | Programs within the mandates of Environment and Climate Change Canada, the Canadian Environmental Assessment Agency, Parks Canada and Natural Resources Canada also support environment-related objectives. Programs within the mandates of Canadian Heritage, Immigration, Refugees and Citizenship Canada, Transport Canada and Public Safety Canada (among other departments) also support various other social objectives. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 1.8 million individuals claimed this credit in 2016. |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 175 | 180 | 190 | 190 | 105 | – | – | – |
Quebec Abatement
Value | |
---|---|
Description | The federal government provides an abatement of personal income tax to taxpayers residing in Quebec equal to 16.5% of Basic Federal Tax payable. The abatement represents compensation to the Province of Quebec for opting out of certain federal transfer programs established in the 1960s. |
Tax | Personal income tax |
Beneficiaries | n/a |
Type of measure | Other |
Legal reference | Federal-Provincial Fiscal Arrangements Act, Part VI Federal Provincial Fiscal Revision Act, 1964 |
Implementation and recent history |
|
Objective – category | To implement intergovernmental tax arrangements |
Objective | This measure reflects the election by the Province of Quebec to receive part of the federal program contribution in the form of a tax abatement. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is considered part of the benchmark tax system, and therefore is not a tax expenditure. |
Subject | Intergovernmental tax arrangements |
CCOFOG 2014 code | n/a |
Other relevant government programs | n/a |
Source of data | Canada Revenue Agency, Tax Sharing Statements |
Estimation method | The value of the Quebec Abatement is calculated by multiplying Basic Federal Tax for Quebec residents by 0.165. |
Projection method | Projections for this measure are based on forecasted growth of Basic Federal Tax. |
Number of beneficiaries | n/a |
Cost Information:
Millions of dollars | 2013 | 2014 | 2015 | 2016 | 2017 (P) | 2018 (P) | 2019 (P) | 2020 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 4,130 | 4,270 | 4,440 | 4,480 | 4,755 | 5,055 | 5,270 | 5,455 |
Page details
- Date modified: