Keeping Canada Globally Competitive
In the 21st Century economy, it’s increasingly difficult to keep up with competition coming from all around the world, despite Canada’s strong economic foundation.
To this end, the Government is creating several new initiatives to help Canada stay on top.
Lending Support to Small Businesses
Small businesses employ the majority of Canadians, yet existing impediments create significant challenges to the Small Business community.
The Government is extending and expanding the temporary Hiring Credit for Small Businesses by one year. In particular, the temporary credit will provide $1,000 against a small company’s increase in its 2013 Employment Insurance (EI) premiums over those paid in 2012 to employers with total EI premiums of $15,000 or less in 2012.
In addition, the Government is increasing the Lifetime Capital Gains Exemption from the current $750,000, by $50,000 to $800,000, effective for the 2014 and subsequent taxation years. As well, the Exemption will now be indexed to inflation after 2014.
At the same time, they are continuing to reduce red tape and improve services for small businesses.
Supporting Mineral Exploration
The Government is also extending the Mineral Exploration Tax Credit to flow-through agreements entered into before April 1, 2014. The existing “look-back” rule remains intact. This rule provides a credit for funds raised in a calendar year as long as the funds are spent on eligible exploration by the end of the following calendar year.
Restricted Farm Losses
Previously, the 2012 Supreme Court allowed a taxpayer to deduct farm losses completely because his chief source of income was considered to be a combination of farming and law.
The Budget proposes that a taxpayer may only deduct farm losses completely against other sources of income if the farming income is the taxpayer’s chief source of income and other sources of income are subordinate. Otherwise, the farming loss will be a restricted farm loss.
The annual restricted farm loss deduction will be increased from a maximum of $15,000 to a maximum of $17,500 ($2,500 plus 1/2 of the next $30,000). These measures will apply to taxation years ending after Budget Day.