On February 11, 2014, Finance Minister Jim Flaherty tabled the government's 2014 Federal Budget, in which the word "integrity" is used 50 times. Budget 2014 reinforces the trend of previous budgets by introducing further tax measures designed to improve the fairness of the tax system and to strengthen tax compliance, while also proposing a number of tax measures that are intended to reduce the tax compliance burden for businesses.
Although the budget contains a number of international, business and personal tax measures, it is predicted that over $1.5 billion in additional income tax revenues will be derived from five key proposals:
- Amendment of an existing anti-avoidance rule in the foreign accrual property income (FAPI) regime to address foreign captive insurance arrangements ($1 billion);
- Tightening of the conditions for a regulated foreign financial institution to qualify for an exception from the FAPI rules ($185 million);
- Changes to graduated rate taxation for testamentary trusts and estates and certain grandfathered inter vivos trusts ($245 million);
- Tightening of the rules relating to tax on split income (kiddie tax) ($190 million); and
- Eliminating the 60-month exemption for certain non-resident trusts established for newly resident Canadians ($110 million).
To learn more about these and other tax measures proposed in Budget 2014, please click here.
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