Like its predecessor, the March 21, 2013 federal budget is entitled “Jobs, Growth, and Long-Term Prosperity”. In his eighth budget, finance minister Jim Flaherty has tabled a document focused on balancing the books, targeted spending, and fine-tuning the tax rules.
Despite being challenged by lower-than-expected growth in the Canadian economy, the government says it is on course to eliminate the deficit and return to a balanced budget by 2015-16. It projects a $25.9 billion deficit for 2012-13, an $18.7 billion deficit in 2013-14, a $6.6 billion deficit for 2014-15, and a surplus of $0.8 billion in 2015-16.
Against this backdrop of deficit reduction, however, the government has introduced several new initiatives to stimulate economic activity and get more Canadians back to work. But even with this commitment to program spending, the deficit will continue to fall because of austerity measures already in place.
The Canada Job Grant program, which received a great deal of pre-budget attention, will provide up to $15,000 per trainee, $5,000 each from the federal and provincial or territorial governments, and $5,000 from the employer. The program is expected to help key industries, like companies in the energy sector, hire the people they need, although it may take up to a year for the federal government to renegotiate existing agreements with the provinces and territories.
The new Building Canada plan pledges more than $47 billion in new infrastructure spending over ten years, starting in 2014-15. This should help restore some of the crumbling infrastructure that is plaguing Canadian cities. What’s more, the initiative makes a link between federal construction and maintenance procurement practices and the hiring of apprentices.
For small businesses, there are a number of welcome changes that will streamline compliance. These include:
- Enhancing CRA’s online enquiries service by allowing small business taxpayers to “go paperless” and rely exclusively on electronic notices stored in the secure My Business portal
- Increasing accountability by introducing “Agent ID”, giving taxpayers access to the names and other identifying details of CRA call centre agents
- Working to expand the use of the Business Number to more governments
- Introducing a pilot program for pre-approval of SR&ED claims
- Streamlining the approval process for authorization of third parties to conduct business tax matters on their clients’ behalf.
The budget also contains stimulus measures for the manufacturing sector, including:
- A two-year extension of the temporary accelerated capital cost allowance for new investment in machinery and equipment
- Renewal of the Federal Economic Development Agency (FedDev Ontario) for southern Ontario with funding of $920 million over five years
- Investing $200 million over five years in the new Advanced Manufacturing Fund in Ontario
- Streamlining foreign trade zone policies and programs by cutting red tape and improving access
- Extending the Hiring
- Credit for Small Business for an additional year
Please click the link to read Lipton’s full commentary of Mr. Flaherty’s latest budget.
2013 Federal Budget Commentary
Jeff Nightingale is the Senior Tax Partner at Lipton LLP, Chartered Accountants. Jeff has written a number of publications and speaks to a variety of professional and business groups, including the Canadian Tax Foundation, the Institute of Chartered Accountants of Ontario and The Law Scociety of Upper Canada. He has also completed the CICA In-Depth Tax Course as well as other advanced taxation courses and is a member of the Canadian Tax Foundation and the Society of Trust and Estate Practitioners.
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