Canada offers some 200 tax incentives and tax breaks for businesses and individuals, as set out in a new report from Canada's Ministry of Finance. This article takes stock of recent changes to Canada's tax landscape.
Whatever sector of the economy a business is engaged in, there are often a handful of different incentives that can be deployed to lower the burden of tax.
Notable reliefs include accelerated depreciation incentives, which allow companies to write-off the cost of new plant or machinery faster than would typically be allowed, and tax breaks to defer, reduce, or eliminate a taxpayer's liability to tax.
Other tax breaks are specifically targeted at sectors encouraged by the Government, such as the various reliefs on offer for film and video production activities in Canada.
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The 2019 Budget made a number of changes to the tax breaks on offer. These were mainly focused on supporting the news journalism sector.
The changes included the introduction of a new tax credit for individuals who acquire online news subscriptions, enabling them to access a maximum credit of CAD75 to reduce their personal tax bill. Taxpayers may also claim a new deduction for charitable donations made to qualifying news organisations.
Further, to support the industry, Budget 2019 introduced a 25% refundable tax credit on wages paid to eligible newsroom employees.
For taxpayers outside the news industry, Canada announced that business taxpayers would be able to immediately write off the cost of the purchase of new zero-emission vehicles.
The remaining announcements on tax reliefs were of a technical nature, affecting the enhanced Scientific Research and Experimental Development (SR&ED) investment tax credit and the farming and fishing industries' access to the small business deduction.
Canada intends to further lower the tax burden this year.
For instance, in plans announced in December 2019, the Government pledged to increase the individual income tax-exempt allowance starting this year until it reaches CAD15,000 in 2023.
Further announcements were expected in the 2020 Federal Budget, which was due to be released on March 30, 2020, but this was shelved due to the COVID-19 crisis.
Instead, the Government has enacted two bills to provide support during COVID-19:
The COVID-19 Emergency Response Act, which received Royal Assent on March 25, 2020; and
The COVID-19 Emergency Response Act, No. 2, which received Royal Assent on April 11, 2020.
These bills introduced a subsidy to support employers to retain their employees, interest-free loans, and income tax payment deferrals until August 31, 2020.
Businesses, including self-employed individuals, are also allowed to defer payments of the goods and services tax/ harmonised services tax until June 30, 2020, as well as customs duty owing on their imports.