Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2021: part 4
Measure | |
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Description | The 10% Temporary Wage Subsidy for Employers was a 3-month measure providing a subsidy equal to 10% of the remuneration paid from March 18 to June 19, 2020, up to $1,375 for each eligible employee. The maximum total was $25,000 per eligible employer, which included corporations eligible for the small business deduction, individuals (excluding trusts), partnerships, non-profit organizations and charities. Eligible employers were able to directly access the subsidy by reducing their remittances of income tax withheld on their employees’ remuneration. |
Tax | Personal and corporate income tax |
Beneficiaries | Businesses, indviduals and other organizations |
Type of measure | Deemed remittance |
Legal reference | Income Tax Act, section 153 |
Implementation and recent history |
|
Objective – category | To encourage employment To support business activity |
Objective | This measure was intended to support businesses and other organizations that are affected by the pandemic through a subsidy on wages and salaries. |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Employment Business – other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs relevant to supporting individuals and businesses during the COVID-19 crisis, as part of the Canada’s COVID-19 Economic Response Plan. The Canada Emergency Busines Account and programs within the mandate of Innovation, Science and Economic Development Canada also support businesses and other organizations that are affected by the COVID-19 pandemic. 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 T4 Statement of Remuneration Paid T5013 Statement of Partnership Income |
Estimation method | Micro-simulation model |
Projection method | After the expiration of the measure, the cost of this measure is projected to become negative. As the subsidy is considered government assistance and will be taxed accordingly, it is expected to increase the taxable income or reduce the losses of claimants. This will have the effect of reducing the use of loss carry-forwards in coming years. |
Number of beneficiaries | No data is available. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal and corporate income tax | - | - | - | - | - | 2,505 | - | - |
Measure | |
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Description | The first $200 of net capital gains of an individual on foreign exchange transactions is exempt from tax. |
Tax | Personal income tax |
Beneficiaries | Individuals |
Type of measure | Exemption |
Legal reference | Income Tax Act, subsections 39(1.1) and (2) |
Implementation and recent history |
|
Objective – category | To reduce administration or compliance costs |
Objective | This measure was introduced to minimize record keeping and simplify administration with respect to modest foreign exchange transactions. |
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 | 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. |
Measure | |
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Description | Specified clean energy generation equipment that generates electricity and/or heat from renewable energy sources (e.g., wind, solar, small hydro) and from waste (e.g., wood waste, landfill gas) or by making efficient use of fossil fuels (e.g., high efficiency cogeneration) and that is acquired by a taxpayer after February 21, 1994 can be depreciated on a declining-balance basis at an accelerated capital cost allowance (CCA) rate of 30% (Class 43.1). If acquired after February 22, 2005 and before 2025, such equipment can be depreciated on a declining-balance basis at an accelerated CCA rate of 50% (Class 43.2). The eligibility criteria for these two classes are generally the same, except that cogeneration systems that use fossil fuels must meet a higher efficiency standard for Class 43.2 than for Class 43.1, electric vehicle charging stations must meet a higher power threshold and electrical energy storage equipment must be connected to an electricity generation system that is eligible for Class 43.2. The 2018 Fall Economic Statement announced that Class 43.1 and 43.2 property acquired after November 20, 2018 and put in use before 2024 would be eligible for immediate expensing, with a phase-out for property put in use after 2023 (75% deduction in 2024 and 2025, and 55% deduction in 2026 and 2027). Without Class 43.1 and Class 43.2, depending on their nature or use, many of these assets would be depreciated at lower rates of 4%, 8% or 20%. A related measure addresses specified intangible start-up costs of clean energy projects (see the measure “Accelerated deductibility of Canadian Renewable and Conservation Expenses”). |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses using clean or efficient energy generation equipment |
Type of measure | Timing preference |
Legal reference | Income Tax Regulations, subsections 1100(2) and 1104(4), Classes 43.1 and Class 43.2 of Schedule II |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure encourages businesses to invest in specified clean energy generation and energy efficiency equipment (Technical Guide to Class 43.1 and 43.2, Natural Ressources Canada, 2013). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
Subject | Environment Business - other |
CCOFOG 2014 code | 70435 - Economic affairs - Fuel and energy - Electricity 70439 - Economic affairs - Fuel and energy - Fuel and energy not elsewhere classified |
Other relevant government programs | Programs within the mandates of Environment and Climate Change Canada, the Impact Assessment Agency of Canada, Parks Canada and Natural Resources Canada also support environment-related objectives. 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: Data on acquisitions by unincorporated businesses of specified clean energy generation equipment is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. For the estimation method for the incremental cost of the changes announced in the 2018 Fall Economic Statement, see the Accelerated Investment Incentive. |
Projection method | No projection is available. |
Number of beneficiaries | About 650 businesses made additions to Classes 43.1 and 43.2 in 2018. No data is available for unincorporated businesses. |
Measure | |
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Description | An accelerated capital cost allowance (CCA) is available for certain property acquired for use in facilities in Canada that liquefy natural gas. The accelerated CCA takes the form of an additional 22% allowance that, combined with the regular CCA rate of 8%, brings the CCA rate up to 30% for liquefaction equipment used in Canada in connection with natural gas liquefaction. A second additional allowance equivalent to 4% brings the CCA rate up to 10% from 6% for non-residential buildings that are part of facilities that are used to liquefy natural gas. These additional allowances may only be claimed against income of the taxpayer that is attributable to the liquefaction of natural gas at the facility. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses in the natural gas liquefaction industry |
Type of measure | Timing preference |
Legal reference | Income Tax Regulations, paragraphs 1100(1)(a.3) and (yb), subsection 1101(4i) and paragraph (b) of Class 47 of Schedule II |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure is intended to encourage investment in facilities that liquefy natural gas to supply emerging international and domestic markets (Prime Minister of Canada news release, February 19, 2015). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
Subject | Business - natural resources |
CCOFOG 2014 code | 70455 - Economic affairs - Transport - Pipeline and other transport |
Other relevant government programs | Programs within the mandate of Natural Resources Canada also support the natural resource sector. 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 on investment in liquefied natural gas facilities by unincorporated businesses is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Estimates are not presented due to confidentiality restrictions. |
Projection method | Projections are not presented due to confidentiality restrictions. |
Number of beneficiaries | A small number of corporations (fewer than 20) made additions to the relevant CCA classes each year. No data is available for unincorporated businesses. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | X | X | X | X | X | X | X | X |
Corporate income tax | X | X | X | X | X | X | X | X |
Measure | |
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Description | Machinery and equipment acquired by a taxpayer after March 18, 2007 and before 2016 and that is primarily for use in Canada for the manufacturing or processing of goods for sale or lease can be depreciated on a straight-line basis at an accelerated capital cost allowance (CCA) rate of 50% (Class 29 of Schedule II to the Income Tax Regulations). Machinery and equipment acquired after 2015 is depreciable on a declining-balance basis at an accelerated CCA rate of 50% (Class 53). The 2018 Fall Economic Statement announced that property in Class 53 acquired after November 20, 2018 and put in use before 2024 would be eligible for immediate expensing, with a phase-out for property put in use after 2023 (75% deduction in 2024 and 2025, and 55% deduction in 2026 and 2027). Machinery and equipment acquired outside of these periods is included in Class 43 and qualifies for a CCA rate of 30% calculated on a declining-balance basis. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses in the manufacturing and processing industry |
Type of measure | Timing preference |
Legal reference | Income Tax Regulations, paragraph 1100(1)(ta), subsections 1100(2) and 1104(4), and Classes 29 and 53 of Schedule II |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This temporary measure provides an incentive for manufacturing and processing businesses to accelerate or increase capital investment (Budget 2008). Providing this incentive for an extended period of time helps to provide businesses with planning certainty for larger projects where the investment may not be completed until several years after the investment decision is made and for longer-term investments with multiple phases (Budget 2015). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
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: Data on acquisitions by unincorporated businesses of manufacturing or processing machinery and equipment is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. For the estimation method for the incremental cost of the changes announced in the 2018 Fall Economic Statement, see the Accelerated Investment Incentive. |
Projection method | No projection is available. |
Number of beneficiaries | About 15,700 corporations made additions to the relevant CCA class in 2018. No data is available for unincorporated businesses. |
Measure | |
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Description | In addition to the regular capital cost allowance (CCA) deduction of 25% per year (Class 41), for assets used in mining, an accelerated CCA has been provided for assets acquired for use in new mines, including oil sands mines, and major mine expansions (i.e., expansions that increase the capacity of a mine by at least 25%). The additional allowance allows the taxpayer to deduct up to 100% of the remaining cost of the eligible assets in computing income for a taxation year, not exceeding the taxpayer’s income for the year from the mine (calculated after deducting the regular CCA). This measure is being phased out and will no longer be available after 2020. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses in the mining and oil and gas industry |
Type of measure | Timing preference |
Legal reference | Income Tax Regulations, subsection 1100(1) and Classes 41, 41.1 and 41.2 of Schedule II |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure was introduced to maintain an incentive for mining investment while eliminating the three-year exemption for corporate profits that was previously provided for new mines, which was considered in many circumstances to be too generous (Proposals for Tax Reform, 1969). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
Subject | Business - natural resources |
CCOFOG 2014 code | 70441 - Economic affairs - Mining, manufacturing, and construction - Mining of mineral resources other than mineral fuels 7043 - Economic affairs - Fuel and energy |
Other relevant government programs | Programs within the mandate of Natural Resources Canada also support the natural resource sector. 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 on Class 41 expenditures by unincorporated businesses is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. |
Projection method | No projection is available. |
Number of beneficiaries | A small number of corporations (fewer than 20) made additions to the relevant CCA class each year. No data is available for unincorporated businesses. |
Measure | |
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Description | New vessels (including furniture, fittings, radio communication equipment and other equipment) that are constructed and registered in Canada and that were not used for any purpose whatsoever before acquisition by their owners can be depreciated at a maximum capital cost allowance (CCA) rate of 33⅓% on a straight-line basis. Vessels that do not qualify for this treatment are depreciable at a CCA rate of 15% on a declining-balance basis. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Regulations, paragraph 1100(1)(v) |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure encourages investment in new vessels built and registered in Canada. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
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: Data on acquisitions of vessels by unincorporated businesses is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. |
Projection method | No projection is available. |
Number of beneficiaries | About 40 corporations made additions to the relevant CCA class in 2018. No data is available for unincorporated businesses. |
Measure | |
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Description | Zero-emission automotive equipment and vehicles purchased by businesses are deductible at a rate of 100% in the year they are put in use. Eligible on-road zero-emission vehicles include electric battery, plug-in hybrid (with a battery capacity of at least 7 kWh) or hydrogen fuel cell vehicles, including light-, medium- and heavy-duty vehicles. Other types of eligible zero-emission automotive equipment and vehicles include off-road, rail, aerial and marine automotive equipment and vehicles that are fully electric or powered by hydrogen. For new on-road zero-emission vehicles this measure applies to eligible vehicles acquired on or after March 19, 2019 and that become available for use before 2028. In the case of used on-road zero-emission vehicles and other types of zero-emission automotive equipment and vehicles, this measure applies to eligible equipment or vehicles acquired on or after March 2, 2020 and that become available for use before 2028. The measure is subject to a phase-out for equipment and vehicles that become available for use after 2023 (75% deduction in 2024 and 2025, and 55% deduction in 2026 and 2027). |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Regulations, subsection 1100(2) and Classes 54, 55, and 56 of Schedule II |
Implementation and recent history |
|
Objective – category | To achieve a social objective To encourage or attract investment |
Objective | This temporary measure was introduced to encourage businesses to convert to zero-emission fleets (Budget 2019). The measure was proposed to be expanded to encourage businesses, including in sectors like mining, transportation, and agriculture, to take advantage of opportunities to upgrade to newer, cleaner technologies (Prime Minister of Canada news release, March 2, 2020). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
Subject | Environment Business - other |
CCOFOG 2014 code | 70539 - Environmental protection - Pollution abatement 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandates of Environment and Climate Change Canada, the Impact Assessment Agency of Canada, Parks Canada, Transport Canada and Natural Resources Canada also support environment-related objectives. 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 | External data |
Estimation method | Micro-simulation model |
Projection method | Forecasted sales of zero-emission vehicles. |
Number of beneficiaries | No data is available. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal and corporate income tax | ||||||||
On-road zero-emission vehicles | – | – | – | – | 4 | 20 | 20 | 30 |
Other types of zero-emission automotive equipment and vehicles | – | – | – | – | – | 15 | 15 | 10 |
Total – personal and corporate income tax | – | – | – | – | 4 | 30 | 35 | 45 |
Measure | |
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Description | Canadian Renewable and Conservation Expenses (CRCE) can be deducted in full in the year incurred even though some of these expenses are capital in nature. CRCE generally includes intangible start-up costs of renewable energy and energy efficiency projects for which at least 50% of the cost of depreciable assets can reasonably be expected to be property that is eligible for accelerated capital cost allowance (CCA) under CCA Class 43.1 or Class 43.2. CRCE also include expenses such as the cost of engineering and feasibility studies, which may be considered analogous to exploration expenses incurred by firms in the non-renewable resource sector. As a type of Canadian Exploration Expense, CRCE can be carried forward indefinitely or transferred to flow-through share investors. For more information, see the related measures “Accelerated capital cost allowance for clean energy generation equipment” and “Flow-through share deductions”. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses using clean or efficient energy generation equipment |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsection 66.1(6) Income Tax Regulations, section 1219 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure encourages investments in clean energy generation and energy conservation projects (Technical Guide to Canadian Renewable and Conservation Expenses, Natural Resources Canada, 2012). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
Subject | Environment Business - other |
CCOFOG 2014 code | 70435 - Economic affairs - Fuel and energy - Electricity 70439 - Economic affairs - Fuel and energy - Fuel and energy not elsewhere classified |
Other relevant government programs | Programs within the mandates of Environment and Climate Change Canada, the Impact Assessment Agency of Canada, Parks Canada and Natural Resources Canada also support environment-related objectives. 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: Data on CRCE incurred by unincorporated businesses is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. |
Projection method | No projection is available. |
Number of beneficiaries | About 100 corporations incurred Canadian Renewable and Conservation Expenses in 2018. No data is available for unincorporated businesses. |
Measure | |
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Description | Canadian Exploration Expenses (CEE) are deductible at a rate of 100% in the year incurred. CEE includes certain intangible costs incurred to determine the existence, location, extent or quality of a crude oil or natural gas reservoir or of a mineral resource not previously known to exist. For the mining sector (including oil sands mines), CEE have also included intangible pre-production development expenses—costs incurred for the purpose of bringing a new mine into production in reasonable commercial quantities. However, the eligibility of these latter expenses will be phased out by 2018. Exploration expenses are undertaken to create an asset (the reserves discovered), and as with generally accepted accounting tax principles, the benchmark tax treatment would be to capitalize and amortize the expenses of successful exploration over the life of the asset. Unsuccessful efforts that do not result in an exploitable asset could be expensed. In practice, it is often not possible to determine whether or not exploration spending has been successful in the year when the expenses are incurred, since it is often several years afterwards before decisions on production are made. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses in the mining and oil and gas industry |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 66.1 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure recognizes the challenges facing mining and oil and gas companies—a low probability of success, large capital requirements and long timeframes before reporting positive cash flow—as they explore for resources (Budget 2015). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
Subject | Business - natural resources |
CCOFOG 2014 code | 70441 - Economic affairs - Mining, manufacturing, and construction - Mining of mineral resources other than mineral fuels 70432 - Economic affairs - Fuel and energy - Petroleum and natural gas |
Other relevant government programs | Programs within the mandate of Natural Resources Canada also support the natural resource sector. 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 on CEE incurred by unincorporated businesses is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. |
Projection method | No projection is available. |
Number of beneficiaries | About 1,830 corporations made Canadian Exploration Expenses in 2018. No data is available for unincorporated businesses. |
Measure | |
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Description | The Accelerated Investment Incentive provides an enhanced first-year allowance for capital property that is subject to the capital cost allowance (CCA) rules, as well as Canadian oil and gas property and Canadian development expenses, with limited restrictions. The Accelerated Investment Incentive does not apply to property in Classes 53 (manufacturing and processing machinery and equipment), 43.1 and 43.2 (clean energy equipment), which are eligible for full expensing. Eligible property generally subject to the half-year rule qualifies for an enhanced CCA equal to three times the normal first-year allowance, and property not generally subject to the half-year rule qualifies for an enhanced CCA equal to one-and-a-half times the normal first-year allowance. The Accelerated Investment Incentive is available for property acquired after November 20, 2018 and that becomes available for use before 2028, subject to a phase-out for property that becomes available for use after 2023. For eligible property that would normally be subject to the half-year rule (or an equivalent rule) and that becomes available for use during the 2024-2027 phase-out period, the Accelerated Investment Incentive effectively suspends the half-year rule (and equivalent rules), providing such property with an enhanced allowance equal to two times the normal first-year allowance. For eligible property that would not normally be subject to the half-year rule (or an equivalent rule) and that becomes available for use during the 2024-2027 phase-out period, the enhanced allowance is equal to one-and-a-quarter times the normal first-year allowance. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, paragraph 66.2(2)(d), definition of accelerated Canadian development expense in subsection 66.2(5), paragraph 66.4(2)(c), definition of accelerated Canadian oil and gas property expense in subsection 66.4(5) Income Tax Regulations, subparagraphs 1100(1)(b)(i) and (c)(i), subparagraph 1100(1)(v)(iv), subsections 1100(2), subsection 1104(4), paragraphs 1(a) and 2(a) of Schedule IV, section 2 and paragraph 3(a) of Schedules V and VI |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This temporary measure provides an incentive for businesses to accelerate or increase capital investment. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
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, Innovation, Science and Economic Development Canada, Business Development Bank of 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 T5013 Statement of Partnership Income |
Estimation method | T2 micro-simulation model, T5013 micro-simulation model, and Aggregate investment data from T1 Income Tax and Benefit Return The incremental cost of the changes announced in the 2018 Fall Economic Statement to the Accelerated capital cost allowance for manufacturing or processing machinery and equipment and to the Accelerated capital cost allowance for clean energy generation equipment is included in the cost of the Accelerated Investment Incentive. |
Projection method | The cost of this measure is projected to decline over time considering that additional allowances claimed in early years will be offset by lower allowances in future years. This effect is partly offset by the projected growth in business investment. |
Number of beneficiaries | No data is available for unincorporated businesses. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Total – personal and corporate income tax | – | – | – | 380 | 3,700 | 2,425 | 1,680 | 1,740 |
Measure | |
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Description | Corporations that donated medicines from their inventory to an eligible charity could claim an additional deduction equal to the lesser of:
An eligible charity is a registered charity that meets the conditions prescribed by regulation. In particular, the registered charity was required to:
|
Tax | Corporate income tax |
Beneficiaries | Corporate donors |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 110.1(1)(a.1) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure provides an incentive for corporations to donate medicines for use in international programs for the distribution of medicines (Budget 2007). |
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. The tax benefit from this measure can be obtained in a taxation year other than the year during which it accrues. |
Subject | Donations, gifts, charities and non-profit organizations |
CCOFOG 2014 code | 70711 - Health - Medical products, appliances, and equipment - Pharmaceutical products |
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 | T2 Corporation Income Tax Return |
Estimation method | T2 micro-simulation model |
Projection method | The tax expenditure is projected to grow in line with nominal gross domestic product. |
Number of beneficiaries | n/a |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Corporate income tax | S | S | S | S | S | S | S | S |
Measure | |
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Description | Adoptive parents can claim the Adoption Expense Tax Credit in respect of the cost of adopting a child under the age of 18. The non-refundable credit is calculated by applying the lowest personal income tax rate to eligible adoption expenses, which are capped at $16,563 per child (2020, indexed to inflation). Eligible adoption expenses cover a range of expenses, including adoption agency fees, legal expenses, and travel and living expenses for themselves and the child, but do not include any expenses for which the adoptive parent has been or is entitled to be reimbursed. Eligible adoption expenses may be incurred for domestic adoptions or for a child adopted from outside of Canada. They must also have been incurred during the “adoption period”, as defined in the legislation. Parents are able to claim the credit in the taxation year in which the adoption is finalized. The two adoptive parents can split the amount if the total combined claim for eligible expenses for each child is not more than the amount before the split. |
Tax | Personal income tax |
Beneficiaries | Adoptive parents |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, section 118.01 |
Implementation and recent history |
|
Objective – category | To recognize non-discretionary expenses (ability to pay) To achieve a social objective |
Objective | This measure provides tax recognition to parents for costs that are unique to the decision to adopt a child (Budget 2005). |
Category | 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 | Families and households |
CCOFOG 2014 code | 71049 - Social protection - Family and children |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Indigenous Services Canada also support Canadian families and households. 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 1,600 individuals claimed this credit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
Measure | |
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Description | The Age Credit is provided to individuals aged 65 and over. The value of the credit is calculated by applying the lowest personal income tax rate to the annually indexed credit amount ($7,637 for 2012). The credit is income-tested—the credit amount is reduced by 15% of net income in excess of an annually indexed threshold amount ($38,508 for 2020). The credit is completely phased out at an income level of $89,422 in 2020. Any unused portion of the credit may be transferred to a spouse or common-law partner. |
Tax | Personal income tax |
Beneficiaries | Seniors |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, subsection 118(2) |
Implementation and recent history |
|
Objective – category | To provide income support or tax relief To achieve a social objective |
Objective | This measure was introduced to reduce the tax burden borne by elderly Canadians (Budget 1972; Budget 2009). |
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 | Social Retirement |
CCOFOG 2014 code | 71029 - Social protection - Old age |
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. 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 6.1 million individuals claimed this credit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 3,170 | 3,335 | 3,450 | 3,625 | 3,840 | 3,930 | 3,955 | 4,035 |
Measure | |
---|---|
Description | Registered apprentice vehicle mechanics may deduct, in computing their employment income subject to income tax, the extraordinary portion of the cost of new tools they purchase in the taxation year or in the last three months of the previous taxation year if the apprentice is in his or her first year. The extraordinary tool costs are those that exceed either the combined value of the deduction for tradespeople’s tool expenses ($500) and the Canada Employment Credit ($1,245 in 2020) or 5% of the taxpayer’s income, whichever is greater. |
Tax | Personal income tax |
Beneficiaries | Apprentice vehicle mechanics |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 8(1)(r) and subsection 8(6) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure recognizes that apprentice vehicle mechanics have reduced ability to pay tax relative to other taxpayers with the same income due to the extraordinary portion of the cost of new tools they have to provide as a condition of their employment (Budget 2001; Budget 2007). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is incurred to earn employment income. |
Subject | Employment Education |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs 70959 - Education - Education not definable by level |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Programs within the mandates of Employment and Social Development Canada, the Social Sciences and Humanities Research Council, the Natural Sciences and Engineering Research Council, the Canadian Institutes of Health Research and Indigenous Services Canada also support objectives related to education and training. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T777 Statement of Employment Expenses |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 6,500 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 |
Measure | |
---|---|
Description | Employers can claim a 10% non-refundable tax credit in respect of wages paid to qualifying apprentices in the first two years of their contract, to a maximum of $2,000 per apprentice per year. A qualifying apprentice is defined as someone working in a prescribed trade in the first two years of their apprenticeship contract. This contract must be registered with the federal government or a provincial or territorial government under an apprenticeship program designed to certify or license individuals in the trade. Prescribed trades include the trades currently listed as Red Seal Trades. Unused credits can be carried back 3 years or forward 20 years to reduce taxes payable in those years. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, section 127 |
Implementation and recent history |
|
Objective – category | To encourage employment |
Objective | This measure encourages employers to hire new apprentices and to support apprentices in their training (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 can be obtained in a taxation year other than the year during which it accrues. |
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 | Personal income tax: T1 Income Tax and Benefit Return Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | The estimates are based on actual amounts earned and claimed by employers. The estimates do not cover investment tax credits claimed by trusts. |
Projection method | Personal income tax: The tax expenditure is projected based on historical growth. Corporate income tax: The tax expenditure is projected to grow in line with total employment. |
Number of beneficiaries | About 800 individuals and 13,000 corporations claimed this credit in 2018. The number of trusts having claimed this credit in 2018 is not disclosed due to confidentiality restrictions. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 2 | 2 | 2 | 2 | 1 | 1 | 1 | 1 |
Corporate income tax | ||||||||
Earned and claimed in current year | 70 | 60 | 60 | 60 | 60 | 50 | 55 | 55 |
Claimed in current year but earned in prior years | 20 | 20 | 25 | 25 | 20 | 15 | 15 | 15 |
Earned in current year but carried back to prior years | 5 | 5 | 4 | 4 | 4 | 4 | 4 | 4 |
Total – corporate income tax | 95 | 80 | 90 | 90 | 80 | 75 | 75 | 75 |
Total | 95 | 85 | 90 | 90 | 85 | 75 | 75 | 80 |
Measure | |
---|---|
Description | A 10% credit is available for qualifying acquisitions of new buildings, machinery and equipment and prescribed energy and conservation property used primarily in qualified activities in the Atlantic provinces, the Gaspé Peninsula and their associated offshore regions. Qualified activities include farming, fishing, logging, manufacturing and processing, the storing of grain, the harvesting of peat, and the production or processing of electrical energy or steam. Unused credits can be carried back 3 years or forward 20 years to reduce taxes payable in those years. Where the credit exceeds the amount of tax payable in a year, 40% of the credit is refundable for small Canadian-controlled private corporations and individuals. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses in the Atlantic provinces and the Gaspé region |
Type of measure | Credit, refundable and non-refundable |
Legal reference | Income Tax Act, section 127 |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure promotes economic development of the Atlantic provinces and the Gaspé region (Budget 1977). |
Category | Non-structural tax measure and refundable tax credit |
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 can be obtained in a taxation year other than the year during which it accrues. The portion of this measure that is refundable is classified as a transfer payment for government accounting purposes, and therefore is not considered to be 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 | The estimates are based on actual amounts earned and claimed by businesses. The estimates do not cover investment tax credits claimed by trusts. |
Projection method | Personal income tax: The cost of this measure is projected based on historical growth. Corporate income tax: The cost of this measure is projected to grow in line with nominal gross domestic product. The projected cost of the non-refundable portion of this measure is reduced in 2019 and 2020 by the introduction of the Accelerated Investment Incentive, full expensing for manufacturing or processing machinery and equipment, and full expensing for clean energy generation equipment, which will reduce corporate taxable income. |
Number of beneficiaries | About 4,700 individuals and 6,300 corporations claimed this credit in 2018. The number of trusts having claimed this credit in 2018 is not disclosed due to confidentiality restrictions. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 |
Corporate income tax | ||||||||
Non-refundable portion | ||||||||
Earned and claimed in current year | 140 | 40 | 45 | 50 | 20 | 20 | 20 | 25 |
Claimed in current year but earned in prior years | 90 | 50 | 450 | 195 | 55 | 105 | 65 | 40 |
Earned in current year but carried back to prior years | 30 | 25 | 10 | 5 | 10 | 10 | 10 | 10 |
Total – non-refundable portion | 260 | 120 | 510 | 245 | 85 | 135 | 95 | 75 |
Refundable portion | 20 | 20 | 20 | 25 | 25 | 25 | 25 | 30 |
Total – corporate income tax | 280 | 140 | 530 | 270 | 110 | 160 | 120 | 100 |
Total | 290 | 150 | 540 | 280 | 120 | 170 | 130 | 115 |
Measure | |
---|---|
Description | The Canada Caregiver Credit consolidated and replaced the previous system of caregiver credits (including the Caregiver Credit, Infirm Dependant Credit and Family Caregiver Tax Credit). In 2020, the amount of the credit is:
|
Tax | Personal income tax |
Beneficiaries | Caregivers |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, paragraph 118(1)(d) |
Implementation and recent history |
|
Objective – category | To recognize non-discretionary expenses (ability to pay) |
Objective | This measure recognizes that individuals providing care for infirm family members have reduced ability to pay tax compared to other taxpayers with similar income (Budget 2017). |
Category | 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 | Families and households Health |
CCOFOG 2014 code | 71049 - Social protection - Family and children 71011 - Social protection - Sickness and disability - Sickness 71012 - Social protection - Sickness and disability - Disability |
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 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 | T1 Income Tax and Benefit Return and information from Statistics Canada’s Canadian Survey on Disability and General Social Survey |
Estimation method | T1 micro-simulation model; estimates for the value of this measure, as well as for the number of individuals with infirm dependants not living in the individual’s home and the number of individuals living with non-infirm seniors, were derived using the Statistics Canada survey results. |
Projection method | T1 micro-simulation model |
Number of beneficiaries | In total, about 504,000 were entitled to an amount for the Canada Caregiver Credit for 2018. This includes about 190,000 who were caring for an infirm spouse or common-law partner, 41,000 who were caring for an eligible dependant, 151,000 individuals who claimed the credit in respect of an infirm dependant age 18 or older, and 122,000 individuals who claimed the credit in respect of an infirm child under 18 years of age. The total number of individuals entitled to an amount for the Canada Caregiver Credit exceeds the total number of individuals claiming an amount because some individuals may not be able to claim an amount in respect of an infirm spouse or common-law partner or eligible dependant after an income test on the dependant’s net income is applied. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | – | – | 190 | 210 | 220 | 220 | 220 | 225 |
Measure | |
---|---|
Description | For the 2020-21 benefit year, the Canada Child Benefit provides a maximum benefit of $6,765 per child under the age of 6 and $5,708 per child aged 6 through 17. The Canada Child Benefit is income-tested based on adjusted family net income with the benefit phase-out rate depending on the number of children. On the portion of adjusted family net income between $31,711 and $68,708, the benefit is phased out at a rate of 7% for a one-child family, 13.5% for a two-child family, 19% for a three-child family and 23% for larger families. Where adjusted family net income exceeds $68,708, remaining benefits are phased out at rates of 3.2% for a one-child family, 5.7% for a two-child family, 8% for a three-child family and 9.5% for larger families, on the portion of income above $68,708. Indexation to inflation of the maximum benefit amounts and phase-out thresholds began as of the 2018-19 benefit year. The Child Disability Benefit is an additional amount provided to families caring for a child eligible for the Disability Tax Credit. For the 2020-21 benefit year, the Child Disability Benefit provides up to $2,886 in benefits per eligible child. The phase-out of this additional amount generally aligns with the Canada Child Benefit. It is phased out at a rate of 3.2% for families with one eligible child and 5.7% for families with more than one eligible child, on adjusted family net income in excess of $68,708. This additional amount, which is included in Canada Child Benefit payments made to eligible families, is also indexed to inflation as of the 2018-19 benefit year. Canada Child Benefit payments are made monthly and are non-taxable. The payment cycle runs from July to June. |
Tax | Personal income tax |
Beneficiaries | Families with minor children |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, section 122.6 |
Implementation and recent history |
|
Objective – category | To recognize non-discretionary expenses (ability to pay) To achieve a social objective |
Objective | This measure gives families more money to help with the high cost of raising their children. |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Families and households |
CCOFOG 2014 code | 71049 - Social protection - Family and children |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Indigenous Services Canada also support Canadian families and households. 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 T1 Income Tax and Benefit Return |
Estimation method | This measure is presented on a fiscal year basis as reported in the Public Accounts of Canada (e.g., the amount for 2013 corresponds to the expenditure reported for the 2013–14 fiscal year). |
Projection method | Projections of the value of this measure are calculated based on projected inflation and growth in family income and population. |
Number of beneficiaries | It is estimated that about 3.5 million families will receive the Canada Child Benefit in 2020. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Canada Child Tax Benefit – Children’s Benefits | 10,510 | 3,240 | – | – | – | – | – | – |
Canada Child Benefit – Children’s Benefits | – | 16,860 | 23,420 | 23,900 | 24,300 | 27,300 | 25,600 | 26,000 |
Quarterly payments for families with young children entitled to the Canada Child Benefit (2021) – Children’s Benefits | – | – | – | – | – | 575 | 1,765 | – |
Note: The COVID-19 Special Payment (May 2020) is included in the estimates for the Canada Child Benefit – Children’s Benefits. |
Measure | |
---|---|
Description | The Canada Emergency Rent Subsidy (CERS) provides support for businesses and other organizations that have suffered a decline in revenues through a subsidy on certain rent- and mortgage-related costs. Eligible entities are eligible individuals, taxable corporations and trusts, partnerships consisting of eligible entities, non-profit organizations, registered charities and other prescribed entities. The measure came into effect on September 27, 2020 and will be available until June 2021. For the first 24 weeks of the program, eligible entities that experience a decline in revenues of 70% or more can receive the maximum subsidy rate of 65% of their eligible costs; this declines to a 40% subsidy for those with a revenue drop of 50%, with the subsidy rate gradually falling to zero for those that have not experienced a decline in revenues. Eligible costs are capped at $75,000 per location and a maximum of $300,000 among affiliated entities. Additionally, entities with locations that have been significantly affected by a public health order are eligible for the Lockdown Support equal to 25% of eligible costs. The Lockdown Support is subject to a $75,000 cap on eligible costs per location, but not the cap of $300,000 among affiliated entities. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses, individuals and other organizations |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, sections 125.7 and 164 |
Implementation and recent history |
|
Objective – category | To encourage employment To support business activity |
Objective | This measure is intended to support businesses and other organizations that are affected by the COVID-19 pandemic through a subsidy on certain rent- and mortgage-related costs. The top-up is intended to provide direct financial support to businesses that are significantly affected by local public health restrictions. |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Business - other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs relevant to supporting individuals and businesses during the COVID-19 crisis, as part of the Canada’s COVID-19 Economic Response Plan. Specifically, the Canada Emergency Rent Subsidy was introduced as a successor to the Canada Emergency Commercial Rent Assistance program administered by the Canada Mortgage and Housing Agency. The Canada Emergency Busines Account and programs within the mandate of Innovation, Science and Economic Development Canada also support businesses and other organizations that are affected by the COVID-19 pandemic. 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 | After the expiration of the measure, the cost of this measure is projected to become negative. As the subsidy is considered government assistance and will be taxed accordingly, it is expected to increase the taxable income or reduce the losses of claimants. This will have the effect of reducing the use of loss carry-forwards in coming years. |
Number of beneficiaries | It is estimated that about 90,000 businesses and other organizations received the Canada Emergency Rent Subsidy and Lockdown Support in 2020. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Canada Emergency Rent Subsidy and Lockdown Support | – | – | – | – | – | 2,180 | 4,305 | – |
Note: The figures in the table correspond to the fiscal impact of the measure as published in the 2020 Fall Economic Statement and reflect the parameters of the program as of that time. |
Measure | |
---|---|
Description | The Canada Emergency Wage Subsidy (CEWS) provides eligible employers with a wage subsidy for eligible remuneration paid to employees in respect of a claim period. The level of subsidy an employer may receive is based on the decline in revenue of the employer during the reference period. For claim periods 1 to 4 (March 15 to July 4, 2020):
|
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses, individuals and other organizations |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, sections 125.7 and 164 |
Implementation and recent history |
|
Objective – category | To encourage employment To support business activity |
Objective | This measure was put in place to help prevent job losses and encourage employers to quickly rehire workers previously laid off as a result of COVID-19. |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Employment Business – other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified 71059 - Social Protection - Unemployment |
Other relevant government programs | Programs relevant to supporting individuals and businesses during the COVID-19 crisis, as part of the Canada’s COVID-19 Economic Response Plan. The Canada Emergency Busines Account and programs within the mandate of Innovation, Science and Economic Development Canada also support businesses and other organizations that are affected by the COVID-19 pandemic. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T4 Summary of Remuneration Paid T2 Corporation Income Tax Return |
Estimation method | T2 micro-simulation model |
Projection method | After the expiration of the measure, the cost of this measure is projected to become negative. As the subsidy is considered government assistance and will be taxed accordingly, it is expected to increase the taxable income or reduce the losses of claimants. This will have the effect of reducing the use of loss carry-forwards in coming years. |
Number of beneficiaries | It is estimated that about 385,000 employers received the Canada Emergency Wage Subsidy in 2020. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal and corporate income tax | – | – | – | – | – | 68,750 | 28,890 | – |
Note: The figures in the table correspond to the fiscal impact of the measure as published in the 2020 Fall Economic Statement and reflect the parameters of the program as of that time. |
Measure | |
---|---|
Description | Taxpayers with employment income may qualify for the Canada Employment Credit. The value of the credit is calculated by applying the lowest personal income tax rate to the lesser of $1,245 (in 2020) and the individual’s employment income for the year. The maximum amount is indexed to inflation. |
Tax | Personal income tax |
Beneficiaries | Employees |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, subsection 118(10) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure provides general tax recognition of work-related expenses (Budget 2006). |
Category | 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 |
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 18.5 million individuals claimed this credit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 2,270 | 2,295 | 2,385 | 2,495 | 2,575 | 2,685 | 2,590 | 2,665 |
Measure | |
---|---|
Description | Qualifying workers between the ages of 25 and 64 will accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000. The credit balance can then be used to refund up to half the costs of taking a qualifying course or training program. In order to accumulate a Canada Training Credit balance in 2020, a worker must have earnings of $10,100 or more (including maternity or parental leave benefits) and must have net income below the upper limit of the third federal tax bracket ($150,473 in 2020). |
Tax | Personal income tax |
Beneficiaries | IIndividuals between the ages of 26 and 65 |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, section 122.91 |
Implementation and recent history |
|
Objective – category | To encourage investment in education |
Objective | This measure was introduced to address barriers to professional development for working Canadians (Budget 2019). |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Employment Education |
CCOFOG 2014 code | 70959 - Education - Education not definable by level 70412 – Economic affairs – General economic, commercial, and labor affairs – General labor affairs |
Other relevant government programs | The Canada Training Credit was introduced alongside a new Employment Insurance Training Support Benefit, intended to help workers replace any income forgone during training periods. Programs within the mandate of Employment and Social Development Canada also support employment. Programs within the mandates of Employment and Social Development Canada, the Social Sciences and Humanities Research Council, the Natural Sciences and Engineering Research Council, the Canadian Institutes of Health Research and Indigenous Services Canada also support objectives related to education and training. 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 | n/a |
Projection method | Eligibility to accumulate a Canada Training Credit balance was simulated based on taxfiler data linked across years. Claim amounts were simulated based on Tuition Tax Credit claims, subject to this accumulated balance, with credit balances adjusted accordingly. |
Number of beneficiaries | It is estimated that approximately 600,000 individuals will claim this credit each year beginning in 2020. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | – | – | – | – | – | 145 | 180 | 205 |
Measure | |
---|---|
Description | The Canada Workers Benefit (CWB) is a refundable tax credit that supplements the earnings of low-income workers. It is generally available to individuals 19 years of age and older not attending school full-time. The refundable credit is equal to 26% of each dollar of earned income in excess of $3,000 to a maximum credit of $1,381 for single individuals without dependants and $2,379 for families (couples and single parents) in 2020. The CWB is phased out at a rate of 12% of each dollar of adjusted net income above thresholds of $13,064 for single individuals without dependants and $17,348 for families in 2020. An additional CWB supplement of up to $713 in 2020 is provided to persons eligible for both the CWB and the Disability Tax Credit. The CWB supplement is phased out at a rate of 12% of each dollar of adjusted net income above a threshold of $24,569 for single individuals without dependants and $37,176 for families in 2020. Maximum benefit amounts and phase-out thresholds are indexed annually for inflation. Advance payment of up to 50% of the estimated CWB and CWB supplement may be available to eligible individuals upon application. Provincial and territorial governments can propose specific changes to the design of the CWB, subject to certain conditions, including cost neutrality. Quebec, Alberta and Nunavut have jurisdiction-specific CWB designs in 2020. |
Tax | Personal income tax |
Beneficiaries | Low-income employees and self-employed individuals |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, section 122.7 |
Implementation and recent history |
|
Objective – category | To encourage employment To provide income support or tax relief |
Objective | This measure, like the WITB before it, makes work more rewarding and attractive for low income-earning Canadians already in the workforce, and encourages other Canadians to enter the workforce. The CWB also provides important income support to low-income working Canadians. (Budget 2007; Budget 2009; Budget 2018) |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Employment Income support |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs 71099 - Social protection - Social protection not elsewhere classified |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. 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 | The value of this measure corresponds to the amounts claimed as credits, as reported in administrative data. |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 1.4 million individuals received this benefit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Working Income Tax Benefit – personal income tax | 1,160 | 1,185 | 1,160 | 1,105 | – | – | – | – |
Canada Workers Benefit – personal income tax | – | – | – | – | 1,995 | 1,605 | 2,085 | 2,080 |
Measure | |
---|---|
Description | Qualified corporations can claim a 25% refundable tax credit in respect of salaries and wages of an eligible Canadian film or video production. The maximum amount of Canadian labour cost qualifying for the credit is 60% of the total cost of a film or video production. The Canadian Audio-Visual Certification Office of the Department of Canadian Heritage is responsible for certifying productions that are eligible for the credit. |
Tax | Corporate income tax |
Beneficiaries | Corporations in the film and video production industry |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, section 125.4 |
Implementation and recent history |
|
Objective – category | To achieve a social objective To support business activity |
Objective | This measure encourages Canadian programming and the development of an active domestic independent production sector (Canadian Heritage news release, December 12, 1995). |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Arts and culture |
CCOFOG 2014 code | 70829 - Recreation, culture, and religion - Cultural services |
Other relevant government 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 | T2 Corporation Income Tax Return |
Estimation method | The estimates are based on actual amounts earned and claimed by businesses. |
Projection method | The cost of this measure is projected to grow in line with nominal gross domestic product. |
Number of beneficiaries | About 1,500 corporations received this benefit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Corporate income tax | 260 | 270 | 300 | 265 | 290 | 220 | 265 | 310 |
Measure | |
---|---|
Description | A 25% refundable tax credit is provided on salary or wages paid to eligible newsroom employees of qualifying Canadian journalism organizations. This credit allows qualifying organizations to claim up to $55,000 in labour costs per eligible newsroom employee per year, for a maximum credit of $13,750 per employee. The credit applies to salary or wages earned in respect of a period on or after January 1, 2019. |
Tax | Personal (trusts only) and corporate income tax |
Beneficiaries | Qualified Canadian journalism orgranizations |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, section 125.6 |
Implementation and recent history |
|
Objective – category | To achieve a social objective To support business activity |
Objective | This measure supports Canadian journalism, recognizing that a strong and independent news media is crucial to a well-functioning democracy (Budget 2019). |
Category | Refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure is classified as a transfer payment for government accounting purposes, and therefore is not considered to be a tax expenditure. |
Subject | Social Business – other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
Other relevant government programs | Programs within the mandate of Canadian Heritage also support the journalism industry. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | Tax data do not currently exist. Estimates are based on Statistics Canada labour statistics by industry and occupation. |
Estimation method | Estimates are based on potential salaries and wages eligible for the credit multiplied by the credit rate. |
Projection method | Same as estimation method. Growth in eligible salaries and wages is not expected to change significantly in the short term. |
Number of beneficiaries | No data is available. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | – | – | – | – | n.a. | n.a. | n.a. | n.a. |
Corporate income tax | – | – | – | – | 90 | 80 | 90 | 90 |
Measure | |
---|---|
Description | Personal-use property is held primarily for the use and enjoyment of the owner rather than as an investment. In calculating the capital gain on personal-use property, both the proceeds of disposition and the adjusted cost base of the property are deemed to be no less than the greater of $1,000 and the actual proceeds of disposition or adjusted cost base, as appropriate. Consequently, no capital gain is recognized if the proceeds of disposition are $1,000 or less. If the proceeds exceed $1,000, the owner of the property could realize a capital gain if the proceeds exceed the cost of the property; however, the capital gain is reduced in situations where the adjusted cost base of the property, as it would be determined in the absence of this measure, is actually less than $1,000. Personal-use property of a corporation is property owned mainly for the personal use or enjoyment of an individual who is related to the corporation. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individuals and corporations |
Type of measure | Exemption |
Legal reference | Income Tax Act, section 46 |
Implementation and recent history |
|
Objective – category | To reduce administration or compliance costs |
Objective | This measure was introduced to minimize record keeping and simplify administration with respect to the purchase and disposal of personal-use items (Summary of 1971 Tax Reform Legislation, 1971). |
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 | 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. |
Measure | |
---|---|
Description | Net capital losses may be carried back three years and forward indefinitely to offset capital gains of other years. Notwithstanding these rules, net capital losses realized in the year in which a taxpayer dies may be deductible against all forms of income for that taxation year and the immediately preceding year. Unused net capital losses from prior years carried forward to the year of death may also be deductible against all forms of income for that taxation year and the immediately preceding year. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individual and corporate investors |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsections 111(1) and 111(2) |
Implementation and recent history |
|
Objective – category | To assess tax liability over a multi-year period |
Objective | This measure supports investors by reducing the risk associated with investment (Budget 1983). |
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 | 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 and T3 Trust Income Tax and Information Return Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: T1 and T3 micro-simulation models. For individuals, the estimate for a given year represents the tax relief associated with the carry-forward to that year of losses incurred in prior years and the deductibility of losses in the year of death of a taxpayer. Data on losses carried back to a previous year is not available. For trusts, the estimate for a given year represents the tax relief associated with the carry-forward to that year of losses incurred in prior years, as well as the carry-back to that year of losses incurred in subsequent years. Data on amounts carried back are preliminary. 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 previous 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 in the case of individuals. Projections for trusts are based on projected growth for individuals. Corporate income tax: The value of this measure is projected to grow in line with corporate taxable income. |
Number of beneficiaries | About 524,000 individuals, 4,700 trusts and 54,400 corporations made use of this measure in 2018 (not counting individuals that carried back losses only). |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | ||||||||
Individuals – carried back | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Individuals – applied to current year | 425 | 435 | 550 | 445 | 390 | 330 | 435 | 465 |
Trusts | 1,140 | 940 | 1,240 | 715 | 790 | 945 | 1,040 | 1,145 |
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 | 325 | 260 | 170 | 355 | 175 | 265 | 260 | 260 |
Applied to current year | 495 | 370 | 415 | 430 | 410 | 405 | 415 | 455 |
Total – corporate income tax | 820 | 630 | 585 | 785 | 585 | 670 | 675 | 715 |
Total | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Measure | |
---|---|
Description | The Caregiver Credit was replaced with the Canada Caregiver Credit in 2017. The Caregiver Credit provided tax relief to individuals providing in-home care to a parent or grandparent 65 years of age or over or an infirm adult dependent relative, including a child or grandchild, a brother, a sister, an aunt, an uncle, a niece or a nephew. The value of the non-refundable credit was calculated by applying the lowest personal income tax rate to the credit amount per eligible dependant ($4,668 in 2016). The credit was reduced when the dependant’s net income exceeded $15,940 and was fully phased out when the dependant’s income reached $20,608. Both the credit amount and the income threshold at which the credit started to be reduced were indexed to inflation |
Tax | Personal income tax |
Beneficiaries | Caregivers |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, paragraph 118(1)(c.1) |
Implementation and recent history |
|
Objective – category | To recognize non-discretionary expenses (ability to pay) |
Objective | This measure recognizes that individuals providing in-home care for elderly or infirm family members have reduced ability to pay tax compared to other taxpayers with similar income (Budget 1998). |
Category | 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 | Families and households Health |
CCOFOG 2014 code | 71049 - Social protection - Family and children 71011 - Social protection - Sickness and disability - Sickness 71012 - Social protection - Sickness and disability – Disability |
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 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 | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | n/a |
Number of beneficiaries | About 257,000 individuals claimed this credit in 2016. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 145 | 145 | – | – | – | – | – | – |
Measure | |
---|---|
Description | Under the benchmark tax system, income is taxable when it accrues, and expenses are deductible in the period when the related revenue is reported. Individuals and corporations engaged in farming and fishing activities may elect to include revenues when received, rather than when earned, and deduct expenses when paid rather than when the related revenue is reported. This measure allows farmers and fishers to better match cash receipts with cash expenses, and may enable them to defer paying tax on income realized but not yet received. Cash basis accounting may result in non-capital losses that are not reflective of the actual losses that would have been created under an accrual system of accounting. This happens because income and expenses are not necessarily matched under the cash basis system. As a result of loss carry-forward and carry-back limitations (i.e., 20 years forward and 3 years back), farming businesses under the cash-based system may not be able to use these losses to reduce taxable income in some instances. A mandatory inventory adjustment and optional inventory adjustment are provided for farming businesses, which act to lessen this outcome. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Farming and fishing businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 28 |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances To reduce administration or compliance costs |
Objective | This measure recognizes that requiring all farmers and fishers to adopt the accrual method of income reporting could result in accounting and liquidity problems (Report of the Royal Commission on Taxation, vol. 4, 1966; Proposals for Tax Reform, 1969). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure is a departure from the accrual basis of taxation. |
Subject | Business - farming and fishing |
CCOFOG 2014 code | 70421 - Economic affairs - Agriculture, forestry, fishing, and hunting - Agriculture 70423 - Economic affairs - Agriculture, forestry, fishing, and hunting - Fishing and hunting |
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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | The Charitable Donation Tax Credit is a non-refundable tax credit on donations to registered charities, registered Canadian amateur athletic associations and other qualified donees. In 2020, the formula for determining the credit for individuals is linked to the lowest, second-highest and highest federal tax rates. The credit rate is 15% on the first $200 of total annual gifts and 29% on total annual gifts over $200, with the exception of donors with taxable income exceeding $214,368 who may claim a 33% tax credit on the portion of total annual donations over $200 made from taxable income greater than $214,368. In general, the credit may be claimed on donations totalling up to 75% of an individual’s net income (up to 100% of net income for donations of ecologically sensitive land and cultural property or in certain other circumstances) and may be carried forward for up to 5 years (up to 10 years for donations of ecologically sensitive land). |
Tax | Personal income tax (including trusts) |
Beneficiaries | Individual donors |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, section 118.1 and subsections 248(30) to (41) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure is designed to support the important work of the charitable sector in meeting the needs of Canadians (Report of the Royal Commission on Taxation, vol. 3, 1966; 1987 Tax Reform). |
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 can be obtained in a taxation year other than the year during which it accrues. The tax benefit from this measure is transferable between spouses or common-law partners. |
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 | T1 Income Tax and Benefit Return T3 Trust Income Tax and Information Return Canadian Cultural Property Export Review Board Environment and Climate Change Canada |
Estimation method | The value of this measure in respect of donations other than cultural property and ecologically sensitive land by individuals is estimated using the T1 micro-simulation model. The value of this measure in respect of donations of cultural property is calculated by multiplying an estimate of donations made in the year by the 29% credit rate. The value of this measure in respect of donations of ecologically sensitive land is estimated by multiplying total donations by the 29% credit rate. The value of this measure in respect of donations by trusts is estimated using the T3 micro-simulation model. No breakdown is available of the tax expenditure accruing to trusts by type of donations. |
Projection method | Projections for individuals are obtained using the T1 micro-simulation model in the case of donations other than cultural property and ecologically sensitive land. Projections in respect of donations of cultural property and ecologically sensitive land are made based on the historical trend in the number and value of donations; in particular, projections in respect of cultural property are made based on an average of past donations. Projections for trusts are based on projected growth for individuals. |
Number of beneficiaries | About 5.2 million individuals and 3,000 trusts claimed this credit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Donations by individuals by type of donations | ||||||||
Publicly listed securities | 190 | 240 | 315 | 270 | 410 | 300 | 340 | 390 |
Ecologically sensitive land | 5 | 10 | 5 | 10 | 5 | 10 | 10 | 10 |
Cultural property | 25 | 25 | 20 | 15 | 10 | 15 | 20 | 20 |
Other | 2,425 | 2,455 | 2,560 | 2,685 | 2,670 | 2,745 | 2,835 | 2,900 |
Subtotal – donations by individuals | 2,645 | 2,735 | 2,900 | 2,980 | 3,095 | 3,070 | 3,205 | 3,320 |
Donations by trusts | 15 | 15 | 35 | 35 | 35 | 35 | 35 | 40 |
Total – personal income tax | 2,660 | 2,750 | 2,935 | 3,015 | 3,130 | 3,105 | 3,240 | 3,355 |
Measure | |
---|---|
Description | Child care expenses incurred for the purpose of earning business or employment income, taking an occupational training course, pursuing education or carrying on research for which a grant is received are deductible from income, up to a limit. The deduction may not exceed the lesser of (i) the total of the maximum dollar limits for all children ($8,000 per child under age 7, $5,000 per child between 7 and 16 years of age and infirm dependent children over age 16, and $11,000 for a child eligible for the Disability Tax Credit, regardless of their age), (ii) two-thirds of earned income for the year (not applicable to single-parent students), and (iii) the actual amount of child care expenses incurred. The spouse with the lower income must generally claim the deduction. However, the higher-income parent may claim a deduction if the lower-income parent is infirm, confined to a bed or a wheelchair, in prison or a similar situation for at least two weeks, attending a designated educational institution, or living apart due to a breakdown in the relationship for a period of at least 90 days during the year. |
Tax | Personal income tax |
Beneficiaries | Families with children |
Type of measure | Deduction |
Legal reference | Income Tax Act, section 63 |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income To recognize education costs |
Objective | This provision recognizes the child care costs incurred by single parents and two-earner families in the course of earning employment income, pursuing education or performing research (Budget 1992; Budget 1998). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is incurred to earn employment income. Expenses incurred to earn business income are generally deductible under the benchmark tax system; however, child care expenses may also have an element of personal consumption, hence the classification of this measure as a tax expenditure. |
Subject | Employment Education Families and households |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs 70989 - Education - Education not elsewhere classified 71049 - Social protection - Family and children |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. Programs within the mandates of Employment and Social Development Canada, the Social Sciences and Humanities Research Council, the Natural Sciences and Engineering Research Council, the Canadian Institutes of Health Research and Indigenous Services Canada also support objectives related to education and training. Programs within the mandates of Employment and Social Development Canada and Indigenous Services Canada also support Canadian families and households. 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 1.4 million individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1,345 | 1,295 | 1,320 | 1,355 | 1,380 | 970 | 1,135 | 1,360 |
Measure | |
---|---|
Description | Parents could claim a non-refundable tax credit at the lowest personal income tax rate on eligible fees for the enrolment of a child under the age of 16 in an eligible program of artistic, cultural, recreational or developmental activity. The credit could be claimed by either parent. If a child qualified for the Disability Tax Credit, the age limit was raised to under 18 years of age and an additional $500 amount could be claimed, subject to the parents spending a minimum of $100 on registration or membership fees for an eligible program of artistic, cultural, recreational or developmental activity. As well, the requirements for an eligible activity were relaxed to cover a broader range of programs more suited to the challenges experienced by these children. Budget 2016 announced the phase-out of this measure by 2017 (see details below). |
Tax | Personal income tax |
Beneficiaries | Families with minor children |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, section 118.031 Income Tax Regulations, section 9401 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure better recognized the costs associated with children’s artistic, cultural, recreational and developmental activities (Budget 2011). |
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 was transferable between spouses or common-law partners. |
Subject | Arts and culture |
CCOFOG 2014 code | 70869 - Recreation, culture, and religion - Recreation, culture, and religion not elsewhere classified |
Other relevant government 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 | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | n/a |
Number of beneficiaries | About 631,000 individuals claimed this credit in 2016. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 45 | 25 | – | – | – | – | – | – |
Measure | |
---|---|
Description | Parents could claim a refundable tax credit at the lowest personal income tax rate on eligible fees for the enrolment of a child under the age of 16 years in an eligible program of physical activity. The credit could be claimed by either parent. If a child qualified for the Disability Tax Credit, the age limit was raised to under 18 years of age and an additional $500 amount could be claimed, subject to the parents spending a minimum of $100 on registration or membership fees for an eligible program of physical activity. As well, the requirements for an eligible activity were relaxed to cover a broader range of programs more suited to the challenges experienced by these children. Budget 2016 announced the phase-out of this measure by 2017 (see details below). |
Tax | Personal income tax |
Beneficiaries | Families with minor children |
Type of measure | Credit, refundable |
Legal reference | Income Tax Act, section 122.8 Income Tax Regulations, section 9400 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure promoted physical fitness among children (Budget 2006). |
Category | Non-structural tax measure and refundable tax credit |
Reason why this measure is not part of benchmark tax system | This measure was classified as a transfer payment for government accounting purposes, and therefore was not considered to be a tax expenditure. |
Subject | Health |
CCOFOG 2014 code | 70761 - Health - Health not elsewhere classified - Health prevention programs (collective) |
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 | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | n/a |
Number of beneficiaries | About 1.7 million individuals claimed this credit in 2016. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 210 | 145 | – | – | – | – | – | – |
Measure | |
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Description | A 10% non-refundable credit was available to corporations in respect of expenditures incurred in Canada for grassroots exploration and pre-production mine development in relation to the mining of diamonds, base and precious metals as well as industrial minerals that become base or precious metals through refining. Budget 2012 announced the phase-out of this credit to make the tax system more neutral between mining and other industries and, as a result, this credit does not apply after 2015. However, unused credits can be pooled and carried forward, and the use of previously earned credits will continue beyond 2015. |
Tax | Corporate income tax |
Beneficiaries | Corporations in the mining industry |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, subsection 127(9), paragraph (a.3) of definition of “investment tax credit” |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure was introduced to improve the international competitiveness of the resource sector and promote the efficient development of Canada’s natural resource base (Improving the Income Taxation of the Resource Sector in Canada, March 3, 2003). |
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 | Business - natural resources |
CCOFOG 2014 code | 70441 - Economic affairs - Mining, manufacturing, and construction - Mining of mineral resources other than mineral fuels |
Other relevant government programs | Programs within the mandate of Natural Resources Canada also support the natural resource sector. 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 | The cost of this measure in a year is calculated using data on actual credits claimed in the year. The cost in the initial year is partially offset in the following year as the corporation’s cumulative Canadian Exploration Expense account is then reduced by the credit claimed the year before. |
Projection method | Projections are based on current market conditions. |
Number of beneficiaries | A small number of corporations (fewer than 20) claim this credit each year. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Corporate income tax | 15 | 5 | 70 | 80 | 70 | 65 | 65 | 60 |
Measure | |
---|---|
Description | A temporary, non-refundable 15% tax credit on amounts paid by individuals for eligible digital news subscriptions. The credit allows individuals to claim up to $500 in costs paid towards eligible digital subscriptions (or the stand-alone cost of the digital subscription in cases of combined digital and newsprint subscriptions) in a taxation year, for a maximum of $75 annually. Eligible subscriptions are those that entitle a taxpayer to access content provided in a digital form by a Qualified Canadian Journalism Organiation (QCJO) that is primariliy engaged in the production of written content. A subscription with a QCJO carrying on a broadcasting undertaking (as defined in the Broadcasting Act) will not qualify for this credit. |
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 To support business activity |
Objective | Recognizing that a strong and independent news media is crucial to a well-functioning democracy, this measure supports Canadian digital news media organizations in achieving a more financially sustainable business model (2018 Fall Economic Statement). |
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 Business - other |
CCOFOG 2014 code | 70499 - Economic affairs - Economic affairs not elsewhere classified |
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. 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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | Based on internal projections of growth in this sector. |
Number of beneficiaries | No data is available. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | – | – | – | – | – | 25 | 30 | 40 |
Measure | |
---|---|
Description | Individual taxpayers can claim a non-refundable credit in respect of the Basic Personal Amount. The value of the credit is calculated by applying the lowest personal income tax rate (15% in 2020) to the Basic Personal Amount. The credit amount is indexed to inflation. The Government has tabled a Notice of Ways and Means Motion to introduce an income-tested supplement to the Basic Personal Amount as of 2020, which will be gradually increased in steps exceeding inflation each year until 2023, at which time the maximum credit amount will be $15,000. Based on the proposed amendments, the maximum credit amount for 2020 would be $13,229, with the fully reduced amount being $12,298 |
Tax | Personal income tax |
Beneficiaries | Individuals |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, paragraph 118(1)(c) |
Implementation and recent history |
|
Objective – category | To promote the fairness of the tax system |
Objective | This measure contributes to tax fairness by ensuring that no tax is paid on a basic amount of income (Report of the Royal Commission on Taxation, vol. 3, 1966; Budget 1998). |
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 | n/a |
Other relevant government programs | n/a |
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 28.3 million individuals claimed this credit in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 33,345 | 33,910 | 35,050 | 36,440 | 37,705 | 43,315 | 43,575 | 45,965 |
Measure | |
---|---|
Description | Employed musicians can deduct amounts from their employment income for the expenses they incur for the maintenance, rental and insurance of musical instruments they are required to provide as a term of their employment. The measure also provides for the deduction of capital cost allowance in respect of these instruments. |
Tax | Personal income tax |
Beneficiaries | Employed musicians |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 8(1)(p) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | The deductibility of certain expenses incurred by artists and musicians recognizes that these expenses are necessary to carry on employment in those fields (Musical Instruments: Income Tax Reform, 1987). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is incurred to earn employment income. |
Subject | Employment Arts and culture |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs 70829 - Recreation, culture, and religion - Cultural services |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. 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 | T777 Statement of Employment Expenses |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 4,400 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1 | 1 | S | 1 | 1 | 1 | 1 | 1 |
Measure | |
---|---|
Description | Donations made by corporations to registered charities are deductible in computing taxable income within certain limits. In general, a deduction may be claimed on donations totalling up to 75% of a corporation’s taxable income. The limit is increased by 25% of the amount of taxable capital gains arising from donations of appreciated capital property and 25% of any capital cost allowance recapture arising from donations of depreciable capital property. The net income restriction does not apply to certain gifts of cultural property or ecologically sensitive land. Donations in excess of the particular limit applied may be carried forward up to 5 years with the exception of gifts of ecologically sensitive land, which may be carried forward up to 10 years. |
Tax | Corporate income tax |
Beneficiaries | Corporate donors |
Type of measure | Deduction |
Legal reference | Income Tax Act, section 110.1 |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure is designed to support the important work of the charitable sector in meeting the needs of Canadians (Report of the Royal Commission on Taxation, vol. 3, 1966). |
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. The tax benefit from this measure can be obtained in a taxation year other than the year during which it accrues. |
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 | 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 taxable income. |
Number of beneficiaries | This measure provided tax relief to about 98,400 corporations in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
By type of donations | ||||||||
Ecologically sensitive land | 1 | 1 | 1 | 10 | 2 | 4 | 4 | 4 |
Cultural property | 20 | 3 | 5 | 5 | 4 | 5 | 5 | 5 |
Other | 435 | 440 | 625 | 680 | 710 | 700 | 715 | 790 |
Total – corporate income tax | 455 | 445 | 635 | 690 | 715 | 710 | 725 | 795 |
Measure | |
---|---|
Description | Contributions to a qualifying environmental trust are deductible in computing the contributor’s income in the years the contributions are made, provided that the contributor is a beneficiary under the trust. Amounts withdrawn from the trust to fund reclamation costs are included in the recipient’s income when withdrawn; however, there is typically no net tax cost at the time of withdrawal since the recipient will be able to deduct the reclamation costs incurred against the above income inclusion. This measure is intended to improve the cash flow of taxpayers at the time the contributions to a qualifying environmental trust are made. It also ensures that companies, such as single-mine companies, which might not have had sufficient taxable income against which to deduct actual reclamation expenses when these expenses were incurred (for the most part at the end of the life of a mine or after its closure), obtain some tax relief for these expenses. Additional details on this measure can be found in the Annex to Part 1 of this report. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses contributing to a qualifying environmental trust |
Type of measure | Timing preference |
Legal reference | Income Tax Act, paragraph 20(1)(ss) |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | This measure assists firms that are required to make contributions to a qualifying environmental trust set up for the purpose of funding reclamation costs (Budget 1997). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition in respect of a contingent expense, resulting in a deferral of tax. |
Subject | Environment |
CCOFOG 2014 code | 70549 - Environmental protection - Protection of biodiversity and landscape |
Other relevant government programs | Programs within the mandates of Environment and Climate Change Canada, the Impact Assessment Agency of Canada, 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 on contributions to qualifying environmental trusts by unincorporated businesses is not available. Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | Personal income tax: No estimate is available. Corporate income tax: The cost of this measure is based on net contributions (total contributions minus funds withdrawn) to qualifying environmental trusts. |
Projection method | Personal income tax: No projection is available. Corporate income tax: Projections are based on current market conditions and the anticipated impact that National Energy Board pipeline regulations will have on the use of qualifying environmental trusts. |
Number of beneficiaries | A small number of corporations/partnerships (fewer than 50) claimed this deduction in 2018. No data is available for unincorporated businesses. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Corporate income tax | 55 | 60 | 60 | 60 | 55 | 55 | 55 | 55 |
Total | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Measure | |
---|---|
Description | Corporations may claim capital cost allowance and investment tax credits on depreciable assets at the earlier of the time that is the end of the taxation year in which the asset is available for use or the second taxation year following its year of acquisition. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsections 13(27) and 127(11.2) |
Implementation and recent history |
|
Objective – category | To reduce administration or compliance costs |
Objective | This measure facilitates the application and administration of the capital cost allowances regime and investment tax credits by limiting the period between the acquisition of a capital asset and the time the cost of the asset is recognized for tax purposes. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure may permit the depreciation of a capital asset faster than its useful life. |
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 | No data is available. |
Estimation method | No estimate is available – see the Annex to Part 1 for an explanation as to why estimates are not available for this measure. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | In accordance with rules established by the World Trade Organization, countries may impose countervailing and anti-dumping duties to offset the injurious effects of imports that are subsidized or dumped. Countervailing and anti-dumping duties paid by Canadian businesses in order to export their products are deductible in computing income subject to tax in the year that the duties are paid, even if the payment is based on a preliminary finding. By contrast, under general income tax rules, since the amount payable may be subsequently adjusted under the trade remedy process, the liability would be considered contingent and no deduction would be allowed until the final determination of the amount of the liability. Under the measure, any refunds or additional amounts (e.g., interest) received as a result of the final determination of the liability must be included in income when received. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses that pay a countervailing or anti-dumping duty |
Type of measure | Timing preference |
Legal reference | Income Tax Act, paragraph 20(1)(vv) |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | This measure recognizes that businesses that pay countervailing and anti-dumping duties are required to pay amounts that are not under their control and that, although these amounts may be subsequently refunded in whole or in part, this process can take several years (Budget 1998). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition in respect of a contingent expense, resulting in a deferral of tax. |
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. |
Measure | |
---|---|
Description | Federally regulated property and casualty insurance companies can deduct, for income tax purposes, earthquake premium reserves which are set aside pursuant to guidelines established by the Office of the Superintendent of Financial Institutions. These reserves represent a surplus appropriation, and would not otherwise be deductible under the benchmark system. |
Tax | Corporate income tax |
Beneficiaries | Property and casualty insurers |
Type of measure | Timing preference |
Legal reference | Income Tax Act, paragraph 20(7)(c) Income Tax Regulations, the description of L in subsection 1400(3) |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | This measure helps ensure that federally regulated property and casualty insurance companies have sufficient financial capacity to pay insured earthquake losses when they occur (Budget 1998). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition in respect of a contingent expense, resulting in a deferral of tax. |
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 | Data on earthquake premium reserves is provided by the Office of the Superintendent of Financial Institutions. |
Estimation method | This tax expenditure is estimated by taking the annual net change in total earthquake premium reserves and multiplying that change by the statutory corporate income tax rate for the year. The net change, and not the amount of the reserve, is of importance because the deduction is effectively applied on a net basis (the taxpayer includes in income the reserve from the previous year, and deducts from income the reserve for the current year). |
Projection method | Earthquake premium reserves are projected to grow at the compound annual growth rate observed over the last eight years. |
Number of beneficiaries | About 20 corporations claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Corporate income tax | S | S | S | S | S | 1 | 1 | 1 |
Measure | |
---|---|
Description | Employed artists are allowed to deduct amounts paid in the year to earn income from their artistic activities up to the lesser of $1,000 or 20% of their income derived from employment in the arts. An amount deductible in a year under this measure is reduced by motor vehicle expenses and musical instrument costs that are also deducted against the taxpayer’s income from the same artistic activity for the year. |
Tax | Personal income tax |
Beneficiaries | Employed artists |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 8(1)(q) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure provides greater certainty to employed artists with respect to the tax treatment of their professional expenses (Government response to the Report of the Standing Committee on Communications and Culture Respecting the Status of the Artist, 1990). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is incurred to earn employment income. |
Subject | Employment Arts and culture |
CCOFOG 2014 code | 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs 70829 - Recreation, culture, and religion - Cultural services |
Other relevant government programs | Programs within the mandate of Employment and Social Development Canada also support employment. 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 | T777 Statement of Employment Expenses |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 1,200 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | S | S | S | S | S | S | S | S |
Measure | |
---|---|
Description | Individuals who have taken a vow of perpetual poverty as a member of a religious order may claim a deduction in a year in which they are a member of that religious order for the amount of earned income and pension benefits assigned and paid in the year to the order. |
Tax | Personal income tax |
Beneficiaries | Individuals who have taken vows of perpetual poverty as members of a religious order |
Type of measure | Exemption |
Legal reference | Income Tax Act, subsection 110(2) |
Implementation and recent history |
|
Objective – category | To achieve a social objective To provide relief for special circumstances |
Objective | This measure recognizes the special situations of members of religious orders who make vows of poverty and assign all of their income to the religious order. |
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 | 70849 - Recreation, culture, and religion - Religious and other community 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. |
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. |
Measure | |
---|---|
Description | A member of the clergy who is supplied living accommodation by their employer, or receives a housing allowance, may claim an offsetting deduction to the extent that this benefit is included in their income for the year. When no allowance is received nor living accommodation provided, a calculated deduction for rent and utilities is provided. The taxpayer must be in charge of or administer a diocese, parish or congregation, or be engaged exclusively in full-time administrative service by appointment of a religious order or denomination. The amount deducted cannot exceed the taxpayer’s income from the office or employment, and is equal to the total amount included in the taxpayer’s income as a taxable benefit because of the housing accommodation or allowance. In general, if the taxpayer owns or rents the accommodation, the amount that may be deducted is restricted to the lesser of two amounts: (1) the greater of $1,000 multiplied by the number of months (up to 10 months) in the year during which the taxpayer qualified as a member of the clergy and one-third of the taxpayer’s remuneration from the office or employment; and (2) the amount, if any, by which rent paid (or the fair market value of the accommodation) exceeds the total deducted by the taxpayer in connection with the residence from income earned from the office or employment or a business. |
Tax | Personal income tax |
Beneficiaries | Members of the clergy or of a religious order, regular ministers of a religious denomination |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 8(1)(c) |
Implementation and recent history |
|
Objective – category | To achieve a social objective |
Objective | This measure recognizes the special nature of the contributions and circumstances of members of the clergy (Budget, March 1949). |
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 | Social |
CCOFOG 2014 code | 70849 - Recreation, culture, and religion - Religious and other community services |
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 |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 27,000 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 90 | 95 | 95 | 95 | 100 | 100 | 100 | 105 |
Measure | |
---|---|
Description | Artists who are self-employed and who create paintings, prints, etchings, drawings, sculptures or similar works of art (but not including those in the business of reproducing works of art) may elect to value their inventory at nil, effectively allowing them to deduct the costs of creating a work of art in the year the costs are incurred rather than in the year the work of art is sold. |
Tax | Personal income tax |
Beneficiaries | Self-employed artists |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsection 10(6) |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | The special treatment of costs incurred by artists recognizes artists’ problems in valuing their works of art on hand, attributing costs to particular works and carrying inventories over long periods of time (Budget 1985). |
Category | 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 | Arts and culture |
CCOFOG 2014 code | 70829 - Recreation, culture, and religion - Cultural services |
Other relevant government 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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | A tradesperson can claim a deduction of up to $500 of the total cost of eligible new tools acquired in a taxation year as a condition of employment that exceeds the amount of the Canada Employment Credit ($1,245 in 2020). The total cost of eligible new tools cannot exceed the total of the employment income earned as a tradesperson and apprenticeship grants received to acquire the tools, which are required to be included in income. |
Tax | Personal income tax |
Beneficiaries | Tradespeople |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 8(1)(s) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure provides tax recognition for the extraordinary cost of tools that tradespeople must provide as a condition of employment (Budget 2006). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | 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 | T777 Statement of Employment Expenses |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 22,000 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
Measure | |
---|---|
Description | A student can claim a deduction for the amount of tuition assistance received for adult basic education when the tuition assistance has been included in the student’s income and the student does not qualify for the Tuition Tax Credit. In order to be eligible, the tuition assistance must be received under a program established under Part II of the Employment Insurance Act, a program established under the authority of the Department of Employment and Social Development Act, a similar program (in certain circumstances) or a prescribed program. |
Tax | Personal income tax |
Beneficiaries | Students |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 110(1)(g) |
Implementation and recent history |
|
Objective – category | To recognize education costs |
Objective | This measure provides assistance to adults undertaking basic education courses as part of a government training program (Budget 2001). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is incurred to earn employment income. |
Subject | Education |
CCOFOG 2014 code | 70959 - Education - Education not definable by level |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada, the Social Sciences and Humanities Research Council, the Natural Sciences and Engineering Research Council, the Canadian Institutes of Health Research and Indigenous Services Canada also support objectives related to education and training. Additional information on the relevant Government programs is provided in the table at the end of Part 3. |
Source of data | T4E Statement of Employment Insurance and Other Benefits |
Estimation method | The value of this measure is calculated by multiplying total non-taxable tuition assistance by an assumed marginal tax rate. |
Projection method | The value of this measure is projected based on historical growth. |
Number of beneficiaries | About 3,000 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1 | 2 | 2 | 2 | 2 | 3 | 3 | 2 |
Measure | |
---|---|
Description | Capital losses arising from the disposition of shares and debt instruments are generally deductible only against capital gains. However, one-half of the capital loss from a deemed disposition of bad debts or shares of a bankrupt small business corporation or from a disposition to an arm’s length person of shares or debts of a small business corporation (known as an “allowable business investment loss”) may be used to offset other income. Unused allowable business investment losses may be carried back three years and forward 10 years. After 10 years, the loss reverts to an ordinary capital loss and may be carried forward indefinitely. Allowable business investment losses are reduced if the Lifetime Capital Gains Exemption has been claimed in prior years (to the extent that allowable business investment losses have not already been reduced by those exemptions). The amount of the reduction depends on the inclusion rate of capital gains. The amount by which a taxpayer’s allowable business investment loss is reduced under this provision is treated as a capital loss for the year in which it arose, and may be carried back three years and forward indefinitely to offset capital gains of other years. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individual and corporate investors |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraph 38(c) and paragraph 39(1)(c) |
Implementation and recent history |
|
Objective – category | To encourage or attract investment |
Objective | This measure recognizes that small businesses often have difficulty obtaining adequate financing, and provides special assistance for risky investments in such businesses (Budget 1985; Budget 2004). |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure permits the deduction of capital losses otherwise than against capital gains. |
Subject | Business - small businesses Savings and investment |
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 | Personal income tax: T1 Income Tax and Benefit Return and T3 Trust Income Tax and Information Return Corporate income tax: T2 Corporation Income Tax Return |
Estimation method | The value of this tax expenditure corresponds to the tax relief provided by permitting allowable business investment losses to be deducted from other income in the year they arise. The tax expenditure is overstated since it is assumed that the losses would not have been otherwise deducted against capital gains. Personal income tax: T1and T3 micro-simulation models Corporate income tax: T2 micro-simulation model |
Projection method | Personal income tax: T1 micro-simulation model in the case of individuals. Projections for trusts are based on projected growth for individuals. Corporate income tax: Projections are based on the average cost of the previous three years, projected to grow in line with nominal gross domestic product. |
Number of beneficiaries | About 7,300 individuals, fewer than 100 trusts and 1,540 corporations claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | ||||||||
Individuals | 35 | 35 | 40 | 35 | 45 | 45 | 45 | 50 |
Trusts | S | 1 | S | 1 | 1 | 1 | 1 | 1 |
Total – personal income tax | 35 | 35 | 40 | 35 | 45 | 45 | 45 | 50 |
Corporate income tax | 15 | 10 | 10 | 5 | 5 | 10 | 10 | 10 |
Total | 50 | 45 | 50 | 40 | 55 | 55 | 55 | 60 |
Measure | |
---|---|
Description | Interest and other carrying charges incurred to earn investment income are deductible under certain conditions. Carrying charges generally include fees, other than commissions, paid for advice sought by a taxpayer on buying or selling specific securities, or for the administration or the management of securities of the taxpayer. The management of securities includes the custody of securities, the maintenance of accounting records, and the collection and remittance of income. Carrying charges also include certain legal fees incurred in relation to the establishment or collection of support payments from a current or former spouse or common-law partner, or from the natural parent of the taxpayer’s child. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individuals and corporations |
Type of measure | Deduction |
Legal reference | Income Tax Act, paragraphs 20(1)(c) and (bb) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn business or property income |
Objective | This measure recognizes that carrying charges are incurred for the purpose of earning income. |
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 | 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: No data is available. |
Estimation method | Personal income tax: T1 micro-simulation model Corporate income tax: No estimate is available. |
Projection method | Personal income tax: T1 micro-simulation model Corporate income tax: No projection is available. |
Number of beneficiaries | About 2 million individuals claimed this deduction in 2018. No data is available for corporations. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax (excluding trusts) | 1,385 | 1,455 | 1,630 | 1,855 | 1,905 | 1,865 | 1,980 | 2,050 |
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. |
Measure | |
---|---|
Description | Under certain conditions, an employee can deduct a number of specific employment expenses in computing income, such as automobile expenses, the cost of meals and lodging for certain transport employees, and legal expenses paid to collect salary. |
Tax | Personal income tax |
Beneficiaries | Employees |
Type of measure | Deduction |
Legal reference | Income Tax Act, section 8 |
Implementation and recent history | Expenses of railway employees, sales expenses and transport employees’ expenses were made deductible in Budget 1948, effective for the 1949 and subsequent taxation years. Travel expenses, motor vehicle travel expenses, and dues and other expenses of performing duties were made deductible in Budget 1951, effective for the 1951 and subsequent taxation years. Teachers’ exchange fund contributions were made deductible in Budget 1957, effective for the 1956 and subsequent taxation years. Legal expenses of employees were made deductible in Budget 1961, effective for the 1961 and subsequent taxation years. Aircraft costs were made deductible in Budget 1979, effective for the 1980 and subsequent taxation years. |
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure provides tax recognition for certain expenses incurred for the purpose of earning employment income. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | 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 772,000 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 930 | 915 | 920 | 910 | 955 | 1,050 | 1,010 | 1,050 |
Measure | |
---|---|
Description | A deduction is available in respect of annual union, professional or like dues paid in the year by an employee (or paid by the employer and included in the employee’s income) in the course of employment. The deduction does not apply to the extent the employee is, or is entitled to be, reimbursed by the employer. |
Tax | Personal income tax |
Beneficiaries | Employees |
Type of measure | Deduction |
Legal reference | Income Tax Act, subparagraphs 8(1)(i)(i) and (iv)-(vii) |
Implementation and recent history |
|
Objective – category | To recognize expenses incurred to earn employment income |
Objective | This measure provides tax recognition for mandatory employment-related expenses. |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | 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 5.9 million individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 970 | 955 | 975 | 1,030 | 1,095 | 1,045 | 1,115 | 1,195 |
Measure | |
---|---|
Description | Transfers of assets to a taxable Canadian corporation for consideration that includes at least one share of the corporation may be made on a tax-deferred basis. The tax deferral, which is on an elective basis, includes accrued capital gains and recapture of excess capital cost allowance deductions that would otherwise be realized on a taxable transfer. In general, the deferral results in the transferor having an accrued gain in respect of the share(s) acquired from the corporation and the corporation having deferred tax consequences in respect of the acquired property. Shareholders of a taxable Canadian corporation as well as the corporation itself are also permitted tax deferrals under certain corporate reorganization rules in which corporate assets are transferred. These reorganization rules include amalgamations, windings up and so-called “corporate butterflies”. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individuals and corporations |
Type of measure | Timing preference |
Legal reference | Income Tax Act, sections 55, 85, 87 and 88 |
Implementation and recent history |
|
Objective – category | To extend or modify the unit of taxation To support business activity |
Objective | These measures facilitate tax-deferred transfers of assets used in business to a corporation and the reorganization of the corporation itself. |
Category | Non-structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure extends the unit of taxation. This measure permits the deferral of the recognition of income or gains for income tax purposes. |
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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | Sales or gifts of assets to children, grandchildren or great-grandchildren typically give rise to taxable capital gains to the extent that the fair market value exceeds the adjusted cost base of the property. However, capital gains realized by an individual on intergenerational transfers of certain types of farm or fishing property (i.e., land and depreciable property including buildings) and shares in a family farm or fishing corporation or interests in a family farm or fishing partnership, may be deferred in certain circumstances until the property is disposed of in an arm's length transaction, if the farm or fishing property continues to be used principally in a farming or fishing business. |
Tax | Personal income tax |
Beneficiaries | Farming and fishing businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsections 70(9) to (9.31) and 73(3) to (4.1) |
Implementation and recent history |
|
Objective – category | To achieve an economic objective - other |
Objective | This measure allows for continuity in the management of family farms or family fishing businesses in Canada by permitting property used principally in a family farming or fishing business to pass from generation to generation on a tax-deferred basis (Budget 1973; Budget 2006). |
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. This measure extends the unit of taxation. |
Subject | Business - farming and fishing |
CCOFOG 2014 code | 70421 - Economic affairs - Agriculture, forestry, fishing, and hunting - Agriculture 70423 - Economic affairs - Agriculture, forestry, fishing, and hunting - Fishing and hunting |
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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | When a property is transferred to another person, capital gains are generally considered to be realized at the time of the transfer on the basis of the fair market value of the property at that time. However, if an individual transfers capital property to a spouse, spousal trust or alter ego trust (i.e., a trust for the benefit of the transferor), the capital property is deemed to have been disposed of by the individual at its adjusted cost base (or at the undepreciated capital cost in the case of depreciable property), and to have been acquired by the spouse or trust for an amount equal to those deemed amounts. This treatment effectively provides a deferral of the taxable capital gain until the disposition of the property by the spouse or trust, or until the transferee or relevant trust beneficiary dies. |
Tax | Personal income tax |
Beneficiaries | Individuals, their spouses and common-law partners |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsection 70(6) and section 73 |
Implementation and recent history |
|
Objective – category | To extend or modify the unit of taxation |
Objective | This measure recognizes that it is not always appropriate to treat a transfer of assets between spouses (or to a trust for one’s own benefit or for the benefit of a spouse) as a disposition for income tax purposes, and therefore allows families flexibility in structuring their total assets (Budget 1971). |
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. This measure extends the unit of taxation. |
Subject | Families and households |
CCOFOG 2014 code | 71049 - Social protection - Family and children |
Other relevant government programs | Programs within the mandates of Employment and Social Development Canada and Indigenous Services Canada also support Canadian families and households. 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. |
Measure | |
---|---|
Description | A taxpayer may defer to the following taxation year, in part or in full, the income received in compensation for the forced destruction of livestock under statutory authority. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Farming businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 80.3 |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | This measure was introduced to allow farmers adequate time to replace their herds, destroyed under statutory authority, without imposing a tax burden in the year of livestock destruction (Budget 1976). |
Category | 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 | Statistics Canada, Table 32-10-0106-01 |
Estimation method | Personal income tax (unincorporated farms): The value of this measure is calculated as the total deferred income in a given year minus the total amount deferred from the year before, multiplied by the share of farm income accruing to unincorporated farms and the average marginal tax rate applicable to farm income. The breakdown of the estimates between individuals and trusts is not available. Corporate income tax (incorporated farms): A similar methodology is used except that the average tax rate used is the estimated average tax rate applicable to meals and entertainment expenses. |
Projection method | Projections for 2020 through 2022 are not provided as the value of this measure cannot be reliably forecast for these years. |
Number of beneficiaries | No data is available. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 1 | -1 | 2 | -2 | S | n.a. | n.a. | n.a. |
Corporate income tax | 1 | S | 3 | S | 1 | n.a. | n.a. | n.a. |
Total | 2 | -1 | 4 | -2 | 1 | n.a. | n.a. | n.a. |
Measure | |
---|---|
Description | Farmers may make deliveries of grain to a grain elevator and receive payment in the form of a cash purchase ticket. If a cash purchase ticket is issued upon the delivery to an elevator of certain listed grains and the holder of the cash purchase ticket is entitled to payment after the end of the taxation year in which the grain is delivered, then the taxpayer may exclude the amount stated on the cash purchase ticket from income for the taxation year in which the grain was delivered, and instead include it in income for the immediately following taxation year. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Farming businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsections 76(4) and (5) |
Implementation and recent history |
|
Objective – category | To achieve an economic objective - other |
Objective | By permitting the deferred reporting of income on grain sales, this measure facilitates the orderly delivery of grain to elevators, which helps meet Canada’s grain export commitments (Budget May 1974). |
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 | Statistics Canada, Table 32-10-0046-01 |
Estimation method | Personal income tax (unincorporated farms): The value of this measure is calculated as the total deferred income from cash purchase tickets in a given year minus the total income from exchanging cash purchase tickets for their cash value, multiplied by the share of farm income accruing to unincorporated farms and the average marginal tax rate applicable to farm income. The breakdown of the estimates between individuals and trusts is not available. Corporate income tax (incorporated farms): A similar methodology is used except that the average tax rate used is the estimated average tax rate applicable to meals and entertainment expenses. |
Projection method | The projection for 2020 uses data available for the first two quarters of the calendar year. Projections for 2021 and 2022 are not provided as the value of this measure cannot be reliably forecast for these years. |
Number of beneficiaries | No data is available. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 15 | 10 | -5 | -10 | -15 | -3 | n.a. | n.a. |
Corporate income tax | 20 | 10 | -5 | -10 | -20 | -2 | n.a. | n.a. |
Total | 35 | 20 | -10 | -20 | -35 | -5 | n.a. | n.a. |
Measure | |
---|---|
Description | Farmers may defer recognition of a portion of the income received on the sale of breeding livestock (breeding animals and breeding bees) in prescribed regions affected by drought, flood or excessive moisture. Such deferred income must be recognized in the first taxation year beginning after the region ceases to be a prescribed region. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Farming businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 80.3 Income Tax Regulations, sections 7305 and 7305.02 |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | This measure allows farmers to use the proceeds from the forced sale of livestock due to drought, flood or excessive moisture conditions to fund the acquisition of replacement livestock (Department of Finance Canada news release 88-155, December 12, 1988; Department of Finance Canada news release 2009-024, March 5, 2009; Budget 2014). |
Category | 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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | If the proceeds derived from the sale of a farm or fishing property or small business shares to a child, grandchild or great-grandchild are not all receivable in the year of sale, recognition of a portion of the capital gain realized may be deferred until the year in which the proceeds become receivable. However, a minimum of 10% of the gain must be brought into income per year, creating a maximum 10-year reserve period. This contrasts with the treatment of capital property generally, where the maximum reserve period is five years (see measure “Deferral through five-year capital gain reserve”). |
Tax | Personal income tax |
Beneficiaries | Farming and fishing businesses, individual investors |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsection 40(1.1) |
Implementation and recent history |
|
Objective – category | To achieve an economic objective - other |
Objective | This measure eases the intergenerational transfer of farm or fishing property sold to a child (Explanatory Notes for Act to Amend the Income Tax Act, December 1982; Budget 2006). |
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 Business - small businesses |
CCOFOG 2014 code | 70421 - Economic affairs - Agriculture, forestry, fishing, and hunting - Agriculture 70423 - Economic affairs - Agriculture, forestry, fishing, and hunting - Fishing and hunting 70499 - Economic affairs - Economic affairs not elsewhere classified |
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. 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 | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model. The value of this tax expenditure corresponds to the difference between the amount of tax that would have been payable if capital gain reserves were fully included in income in the year of disposition of the asset and the amount of tax that is payable as reserve amounts are included in income over time. |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 8,600 individuals claimed a 10-year capital gain reserve in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
By type of property | ||||||||
Farm and fishing property | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Small business shares | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Total – personal income tax | 25 | 20 | 30 | 25 | 20 | 10 | 20 | 20 |
Measure | |
---|---|
Description | In some cases, a taxpayer may receive portions of the payment from the sale of a capital property over a number of years. Under those circumstances, realization of a portion of the capital gain may be deferred until the year in which the proceeds are received. A minimum of 20% of the gain must be brought into income per year, creating a maximum five-year deferral period. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individuals and corporations |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsection 40(1) |
Implementation and recent history |
|
Objective – category | To assess tax liability over a multi-year period |
Objective | This measure, while limiting tax deferral opportunities, recognizes that where capital gain proceeds are receivable over time, fully taxing gains in the year of sale could result in significant liquidity problems for taxpayers (Explanatory Notes for Act to Amend the Income Tax Act, December 1982). |
Category | 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 - other Savings and investment |
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 and T3 Trust Income Tax and Information Return Corporate income tax: No data is available. |
Estimation method | The value of this tax expenditure corresponds to the difference between the amount of tax that would have been payable if capital gain reserves were fully included in income in the year of disposition of the asset and the amount of tax that is payable as reserve amounts are included in income over time. Personal income tax: T1 and T3 micro-simulation models Corporate income tax: No estimate is available. |
Projection method | Personal income tax: T1 micro-simulation model in the case of individuals. Projections for trusts are based on projected growth for individuals. Corporate income tax: No projection is available. |
Number of beneficiaries | About 8,400 individuals and 1,000 trusts claimed a five-year capital gain reserve in 2018. No data is available for corporations. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | ||||||||
Individuals | 10 | 15 | 25 | 30 | 30 | 25 | 30 | 30 |
Trusts | S | -2 | 4 | 5 | 5 | 5 | 5 | 5 |
Total – personal income tax | 10 | 15 | 30 | 35 | 35 | 30 | 35 | 35 |
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. |
Measure | |
---|---|
Description | Capital gains and capital cost allowance recapture resulting from the voluntary disposition of land and buildings by businesses may be deferred if replacement properties are purchased within a specified time period (e.g., a business changing location). The rollover is generally not available for properties used to generate rental income. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Businesses |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsections 13(4) and 44(1) |
Implementation and recent history |
|
Objective – category | To support business activity |
Objective | This measure supports businesses by permitting the deferral of capital gains and capital cost allowance recapture that are incidental to an active business. |
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 - 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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | Capital gains and capital cost allowance recapture resulting from an involuntary disposition (e.g., insurance proceeds received for an asset destroyed in a fire) may be deferred if the funds are reinvested in a replacement asset within a specified period. The capital gain and capital cost allowance recapture are taxable upon disposition of the replacement property. |
Tax | Personal (including trusts) and corporate income tax |
Beneficiaries | Individuals and corporations |
Type of measure | Timing preference |
Legal reference | Income Tax Act, subsections 13(4) and 44(1) |
Implementation and recent history |
|
Objective – category | To provide relief for special circumstances |
Objective | Rollover provisions are provided in some situations in which it would be unfair to collect capital gains tax even though the taxpayer has sold or otherwise disposed of an asset at a profit (Proposals for Tax Reform, 1969). |
Category | 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 - 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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | In computing income for tax purposes, individuals and corporations carrying on the practice of certain professions (i.e., accounting, legal, medical doctor, dental, chiropractic or veterinary professional practice) could either use an accrual accounting method by default, or elect to use a billed-basis accounting method. Under the default accrual method, expenses were required to be matched with their associated revenues. Under the elective billed-basis method, the expenses relating to work in progress could be deducted as incurred even though the associated revenues were not brought into income until either the revenues were billed and became receivable or were paid. This treatment gave rise to a deferral of tax. Budget 2017 announced the phase-out of this measure. |
Tax | Personal and corporate income tax |
Beneficiaries | Individuals and corporations carrying on certain professional practices |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 34 |
Implementation and recent history |
|
Objective – category | To reduce administration or compliance costs |
Objective | This measure recognizes the inherent difficulty in valuing unbilled time and work in progress (Summary of 1971 Tax Reform Legislation, 1971). |
Category | 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 - 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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | A Deferred Profit-Sharing Plan (DPSP) is an arrangement under which an employer contributes profits from their business to a trust for the benefit of a designated group of employees. Employers may make tax-deductible contributions to a DPSP on behalf of their employees. The contributions are not immediately taxed in the hands of the employee, and the investment income is not taxed as it is earned. Withdrawals are included in the income of the employee for tax purposes. Employer contributions are limited to 18% of an employee’s earnings up to one-half of the defined contribution Registered Pension Plan (RPP) dollar limit for the year ($13,915 for 2020). Total contributions to a DPSP and a defined contribution RPP are limited to 18% of an employee’s earnings up to a specified dollar amount ($27,830 for 2020). |
Tax | Personal income tax |
Beneficiaries | Employees with a Deferred Profit-Sharing Plan |
Type of measure | Timing preference |
Legal reference | Income Tax Act, section 147 |
Implementation and recent history |
|
Objective – category | To encourage savings To achieve an economic objective - other |
Objective | The tax treatment of these plans encourages additional retirement savings, and fosters co-operation between employers and their workers by encouraging employees to participate in their employer’s business (Budget 1960). |
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 | No data is available. |
Estimation method | No estimate is available. |
Projection method | No projection is available. |
Number of beneficiaries | No data is available. |
Measure | |
---|---|
Description | Attendant care as well as certain other disability supports expenses incurred to carry on a business or for education or employment purposes are deductible from income unless they have been reimbursed by a non-taxable payment (e.g., insurance payment). Generally, the deduction is limited to the lesser of the amounts paid for eligible expenses and the taxpayer’s earned income. Students are additionally entitled to claim the deduction against up to $15,000 of non-earned income, subject to the length of their educational program. Individuals do not have to be eligible for the Disability Tax Credit in order to claim the deduction, although other criteria may apply for eligibility of certain types of disability supports. Expenses claimed under the disability supports deduction cannot be claimed under the Medical Expense Tax Credit. |
Tax | Personal income tax |
Beneficiaries | Individuals with disabilities |
Type of measure | Deduction |
Legal reference | Income Tax Act, section 64 |
Implementation and recent history |
|
Objective – category | To recognize non-discretionary expenses (ability to pay) |
Objective | This measure recognizes the costs incurred by taxpayers with disabilities for disability supports required to enable them to earn business or employment income or to attend school (Budget 1989; Budget 2000; Budget 2004). |
Category | Structural tax measure |
Reason why this measure is not part of benchmark tax system | This measure provides tax recognition for an expense that is incurred to earn employment income. This measure provides tax recognition for an expense that is incurred for education purposes. |
Subject | Health Employment Education |
CCOFOG 2014 code | 71012 - Social protection - Sickness and disability - Disability 70412 - Economic affairs - General economic, commercial, and labor affairs - General labor affairs 70989 - Education - Education not elsewhere classified |
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. Programs within the mandate of Employment and Social Development Canada also support employment. Programs within the mandates of Employment and Social Development Canada, the Social Sciences and Humanities Research Council, the Natural Sciences and Engineering Research Council, the Canadian Institutes of Health Research and Indigenous Services Canada also support objectives related to education and training. 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 2,900 individuals claimed this deduction in 2018. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 |
Measure | |
---|---|
Description | The Disability Tax Credit provides tax relief for non-itemizable disability-related costs in respect of an eligible individual that has been certified by a qualified medical practitioner as having a severe and prolonged disability. The value of the non-refundable credit is calculated by applying the lowest personal income tax rate to the disability credit amount ($8,576 in 2020). The credit amount is indexed to inflation and can be transferred to a supporting spouse, parent, grandparent, child, grandchild, brother, sister, aunt, uncle, nephew or niece of the individual. Families caring for eligible children with severe and prolonged impairments may claim an additional amount as a supplement to the credit. The value of the supplement is calculated by applying the lowest personal income tax rate to the supplement amount ($5,003 in 2020) and is reduced dollar-for-dollar by the amount of child care or attendant care expenses in excess of $2,930 (for 2020) that is claimed under the child care expense deduction, the disability supports deduction, or the Medical Expense Tax Credit. Both the expense threshold and the supplement amount are indexed to inflation. |
Tax | Personal income tax |
Beneficiaries | Individuals with disabilities, caregivers |
Type of measure | Credit, non-refundable |
Legal reference | Income Tax Act, subsection 118.3(1) |
Implementation and recent history |
|
Objective – category | To recognize non-discretionary expenses (ability to pay) |
Objective | This measure improves tax fairness by recognizing the effect of a severe and prolonged disability on an individual’s ability to pay tax (Budget 1997; Budget 2005). |
Category | 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. This measure extends the unit of taxation. |
Subject | Health |
CCOFOG 2014 code | 71012 - Social protection - Sickness and disability - Disability |
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 | T1 Income Tax and Benefit Return |
Estimation method | T1 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | In total, 1.2 million individuals claimed an amount for the Disability Tax Credit for 2018. This includes about 770,000 eligible persons who claimed all or some portion of the credit for themselves, 150,000 individuals who claimed all or some portion of the credit on behalf of an eligible spouse or common-law partner, 260,000 individuals who claimed all or some portion of the credit transferred from an eligible person (such as a parent for a minor child), and 30,000 individuals who claimed all or some portion of the credit for themselves and on behalf of another eligible person. This data reflects revisions to the model used to estimate tax expenditures. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
---|---|---|---|---|---|---|---|---|
Personal income tax | 990 | 1,030 | 1,090 | 1,150 | 1,200 | 1,250 | 1,300 | 1,350 |
Measure | |
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Description | Income earned by corporations is subject to corporate income tax and, on distribution as dividends to individuals, personal income tax. The result is that dividends received by Canadian taxpayers are taxed at both the corporate and the personal levels. The Dividend Tax Credit (DTC), provided within the personal income tax system, is intended to compensate a taxable individual for corporate income taxes that are presumed to have been paid. The DTC is generally meant to ensure that income earned by a corporation and paid out to an individual as a dividend will be subject to the same amount of tax as income earned directly by the individual. The DTC mechanism calculates a proxy for pre-tax corporate profits and then provides a tax credit to individuals in recognition of corporate-level tax. Under this approach, an individual is first required to include the grossed-up amount of taxable dividends (i.e., the proxy for pre-tax profits) in income. Using the grossed-up amount, the tax system in effect treats the individual as having directly earned the amount that the corporation is presumed to have earned in order to pay the dividend. The DTC then compensates the individual for the amount of corporate-level tax presumed to have been paid on the grossed-up amount. The tax system has two DTC rates and gross-up factors to recognize the two different corporate income tax rates that generally apply to corporations. The enhanced DTC (15.0198% in 2020) and gross-up (38% in 2020) are applied to dividends distributed to an individual from corporate income taxed at the general corporate tax rate (eligible dividends). The ordinary DTC (9.0301% in 2020) and gross-up (15% in 2020) are applied to dividends distributed to an individual from corporate income not taxed at the general corporate tax rate (ineligible dividends). The same gross-up and tax credit mechanism applies to trusts in respect of the taxable dividends retained and taxed within the trusts. |
Tax | Personal income tax (including trusts) |
Beneficiaries | Individual investors |
Type of measure | Other; credit, non-refundable |
Legal reference | Income Tax Act, sections 82 and 121 |
Implementation and recent history |
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Objective – category | To prevent double taxation |
Objective | These measures contribute to the integration of the corporate and personal income tax systems. |
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 | Savings and investment |
CCOFOG 2014 code | n/a |
Other relevant government programs | n/a |
Source of data | T1 Income Tax and Benefit Return T3 Trust Income Tax and Information Return |
Estimation method | T1 micro-simulation model T3 micro-simulation model |
Projection method | T1 micro-simulation model |
Number of beneficiaries | About 3.8 million individuals claimed this credit in 2018, while about 32,000 trusts are projected to benefit from it. |
Millions of dollars | 2015 | 2016 | 2017 | 2018 | 2019 (P) | 2020 (P) | 2021 (P) | 2022 (P) |
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Personal income tax | ||||||||
Individuals | 5,780 | 4,475 | 5,395 | 4,925 | 4,795 | 4,510 | 4,810 | 5,060 |
Trusts | 450 | 225 | 235 | 275 | 225 | 170 | 205 | 230 |
Total – personal income tax | 6,230 | 4,700 | 5,630 | 5,200 | 5,020 | 4,680 | 5,015 | 5,290 |
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