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This quarterly update discusses developments related to the
accounting for income taxes. It includes:
Federal and provincial/territorial bills tabled or received
royal assent in 2012; or tabled before 2012, but did not receive
royal assent before 2012
Corporate income tax rates1 accounting status
(January 1, 2009, to June 30, 2012)
Background determining the accounting status of income tax
changes (see the Appendix on page 5)
There were no key legislative developments from April 1 to June
30, 2012, that affect income taxes.
Federal and provincial/territorial
bills
The following tables list key bills that include income tax rate
changes, other income tax changes (e.g., for research and
development) or capital tax changes, and that were:
tabled or received royal assent during 2012 (Table 1); or
tabled before 2012, but did not receive royal assent before
2012 (Table 2)
1. See "IFRS" in the Appendix for
information on when IFRS applies and the entities that are subject
to IFRS.
2. Bill C-38 (2012 federal budget bill) does not include the
federal government's March 29, 2012 budget measures that:
revise the scientific research and experimental development
(SR&ED) investment tax credit and expenditure rules;
confirm the tax treatment on secondary transfer pricing
adjustments with foreign affiliates;
strengthen the thin capitalization rules;
introduce rules to curtail a variety of transactions, referred
to as foreign affiliate dumping transactions; and
ensure that partnerships cannot be used to circumvent the
intended application of sections 88 and 100 of the Income Tax
Act.
1. Bill C-10 (2007) died on the parliamentary order paper on
September 7, 2008, when the October 14, 2008 federal election was
called.
On July 16, 2010, the Department of Finance released revised
income tax technical proposals, which reintroduce amendments
included in Bill C-10 (2007) and are largely identical to those in
Bill C-10 (2007). However, amendments included in Bill C-10 (2007)
but absent from these proposals include those pertaining to:
non-resident trusts and foreign investment entities; and
the Canadian Film or Video Production Tax Credit.
Amendments in Bill C-10 (2007) that are reflected in the July
16, 2010 proposals continue to be substantively enacted as of June
15, 2007. The July 16, 2010 proposals are expected to be introduced
as a bill in the House of Commons.
Corporate income tax rates accounting status
(January 1,
2009, to June 30, 2012)
The following information excludes Canadian-controlled private
corporation small business rates and thresholds. When there is a
status change from April 1, 2012, to June 30, 2012, the row is
shaded.
1. The effective date for the "provincial Specified
Investment Flow-Through (SIFT) tax rate" is 2007 or 2008
taxation years if an election is filed. Except for Quebec, this
rate will be:
based on the general provincial corporate income tax rate for
each province in which the SIFT has a permanent establishment;
and
10% for SIFTs that do not have a permanent establishment in a
province.
2. The following table shows the status of legislation for
corporate income tax rates (excluding Canadian-controlled private
corporation small business rates and thresholds) from January 1,
2011, to June 30, 2012, inclusive.
a) See "IFRS" in the Appendix for
information on when IFRS applies and entities subject to IFRS.
b) British Columbia's 2012 budget increases the general and
M&P income tax rate to 11% on April 1, 2014, but describes the
increase as a temporary measure to be triggered only if the
province's fiscal situation worsens.
c) New Brunswick's Bill 53 (2011 budget bill) maintains the
general and M&P rate at 10% (the rate was to decline to 8% on
July 1, 2012).
d) Ontario's Bill 114 (2012 budget bill) freezes the general
income tax rate at 11.5% (the rate was to drop to 11% on July 1,
2012, and to 10% on July 1, 2013). See Table 1 on
page 2 for the bill name.
3. For Ontario, the thresholds at which the Corporate Minimum
Tax (CMT) applies (on an associated basis) are revised as
follows:
4. For Quebec, exceptions to the general rate follow:
5. Quebec's SIFT Distribution Tax equals the Quebec
corporate income tax rate that would apply if the SIFT were a
corporation.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The current immigration bill pending before the US Congress contains provisions that will make it easier for Canadians and retirees to obtain non-immigrant status in the US.
The US Government Accountability Office recently released a report that encouraged the Internal Revenue Service to seek out off-shore filers who have circumvented the IRS’s recent Voluntary Disclosure programs in favor of "quiet disclosure."
The governments of Canada are facing increased scrutiny and criticism in respect of the growing deficits that have been accumulated at both the federal and provincial levels.
The CRA announced a new and aggressive campaign to crack down on international tax evasion and will have significant additional information-gathering powers.
The role of intent in the determination of whether a worker is an employee or independent contractor has taken on greater significance in the last decade or so.
Tax Communiqué: Highlights From The Budget 2013 (Video Content)
