2018 FEDERAL BUDGET
Tuesday, February 27th, 2018
This is a special site set up for our IntelliConnect customers where all of the budget documents will be posted as they become available. This site will provide you with a fast and reliable access gateway to these important documents.
Budget documents will also be available through IntelliConnect News Trackers. Subscribers to the Canadian Tax Reporter will also receive a printed “Special Report” containing all budget documents and related commentary.
The 2018 Budget came earlier than usual and contains many interesting proposals, including more long-awaited guidance on passive income. Below you’ll find a few highlights. Don’t forget to register for the Dentons Tax Update webinar on March 1, go to IntelliConnect for full coverage of the budget, and consult your printed Special Report for all the details.
Passive Income Proposals – Private Corporations
Following last year’s focus on private corporation proposals, Canadians have been waiting for more details on how the government proposed to tax passive income earned by private corporations.
Approximately 3% of Canadian-controlled private corporations are anticipated to be affected by the new rules – about 50,000 corporations. Budget 2018 proposes to reduce a corporation’s small business limit where the corporation earns investment income exceeding $50,000. For example, a corporation with $100,000 of passive income will have its small business limit reduced to $250,000. This reduction will operate in tandem with the reduction where taxable capital exceeds $10 million—the greater of these two reductions will apply. A new amount called “Adjusted Aggregative Investment Income” accounts for the corporation’s investment income.
The Budget proposes that two separate refundable dividend tax on hand (“RDTOH”) accounts be maintained going-forward: eligible RDTOH and non-eligible RDTOH. Eligible RDTOH will track Part IV tax paid on eligible dividends, and will be refunded when either an eligible or non-eligible dividend is paid. Non-eligible RDTOH will track Part I refundable taxes and Part IV tax on non-eligible dividends. Only non-eligible dividends will trigger a refund from this account.
At-Risk Rules for Tiered Partnerships
The Budget clarifies that the at-risk rules for limited partnerships apply where a partnership is a limited partner of another partnership. This change was introduced to a response to a recent court decision, which in the government’s view, was inconsistent with the underlying policy of the at-risk rules.
Changes to the Foreign Affiliate Rules
Budget 2018 proposes to make various modifications to the foreign affiliate rules. Proposed amendments relate to income of an investment business, controlled foreign affiliate status, trading or dealing in indebtedness, extending the reassessment period in certain circumstances, and aligning deadlines for a taxpayer’s income tax return and foreign affiliate information return.
Stopping the Clock
Where a CRA compliance order or information requirement is contested, a new rule will “stop the clock” to prevent the tax year from being statute barred. This rule already exists with respect to requirements for foreign-based information, so the government has expanded this rule to apply to requirements for information that is not foreign-based
Non-Resident Surplus Stripping
The Budget proposes to address transactions where taxpayers have attempted to avoid the non-resident surplus stripping rules by transferring an interest in a partnership or trust that hold shares (rather than transferring the shares directly). Effectively, the non-resident surplus stripping rules will be tightened by adding a “look-through” rule for partnerships and trusts.
Notice of Ways and Means Motions
Notice of Ways and Means Motion to Amend the Income Tax Act and Other Related Legislation
Draft Amendments to Various GST/HST Regulations
Notice of Ways and Means Motion to Amend the Excise Act, 2001
and Other Related Legislation
Notice of Ways and Means Motion to Amend the Excise Tax Act
Budget Plan, Speech and Tax Measures
Tax Measures: Supplementary Information
Economic and Fiscal Overview
Budget Plan – Chapter 1 – Growth
Budget Plan – Chapter 2 – Progress
Budget Plan – Chapter 3 – Reconciliation
Budget Plan – Chapter 4 – Advancement
Budget Plan – Chapter 5 – Equality
Budget Plan – Annex 1 – Economic and Fiscal Outlook
Budget Plan – Annex 2 – Details of Economic and Fiscal Projections
Annex 3 – Strenghtening and Modernizing Canada’s Fiscal Sector
Press Releases, Fact Sheets and Backgrounders
News Release – Budget 2018: Equality and Growth for a Strong Middle Class
The Fiscal Monitor – A Publication of the Department of Finance
Factsheet – Advancement
Factsheet – Equality and Growth
Factsheet – Progress
Factsheet – Reconciliation
Backgrounder – Gender Equality and a Strong Middle Class
Backgrounder – Supporting Researchers to Build a More Innovative Canadian Economy
Backgrounder – Protecting Canada’s Natural Beauty
Backgrounder – Strengthening the Canada Child Benefit
Backgrounder – Introducing the Canada Workers Benefit
Backgrounder – Canada’s New Parental Sharing Benefit
Backgrounder – Pay Equity: Empowering Women for a Strong Middle Class
Backgrounder – More Jobs, a Growing Economy, and a Stronger Middle Class