2011 Federal Budget: PwC

Mar 23, 2011 | Corporate Member News

Get our audio commentary on various issuesBruce Harris covers the donations of publicly listed flow-through shares
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Elizabeth Johnson summarizes new limitations to partnership corporate tax deferral
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Sharon Carew discusses the changes to individual pension plans
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Todd Thornton reviews the extension to the accelerated capital cost allowance rate for manufacturing and processing equipment
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The federal budget that Minister of Finance Jim Flaherty presented on March 22, 2011, may well be defeated when it comes before the House of Commons, triggering an election. Even so, many of its measures are likely to be re-introduced later.

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PwC’s 2011 proposals for the Minister’s consideration

2011 Federal Budget Submission (January 24, 2011) 

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4:59 p.m. EST: The Federal Government announced today plans to attract more health care workers to underserved rural and remote communities by forgiving up to $40,000 of the federal component of Canada Student Loans for new family physicians and up to $20,000 for nurse practitioners and nurses.

4:56 p.m. EST: The Government today announced new measures to improve the quality of life and expand opportunities for older Canadians, including enhancing the Guaranteed Income Supplement (GIS) for those seniors who rely on their Old Age Security and the GIS and may be at risk of experiencing financial difficulties. This measure will provide a new annual top-up benefit of up to $600 for single seniors and $840 for couples. It represents an investment of more than $300 million per year, and will improve the financial security of more than 680,000 seniors across Canada.

Other measures for seniors include:

– Enhancing the New Horizons for Seniors Program with $10 million over two years to support projects that ensure seniors contribute to and benefit from activities in their communities.

– Changing federal rules to eliminate the mandatory retirement age for federally regulated employees in order to give older workers wishing to work the option of remaining in the workforce.

4:54 p.m. EST: New initiatives proposed in today’s 2011 Federal Budget announcement include funding for the growth and development of some of Canada’s key industry sectors, these measures include:

– Announcing a two-year, $50-million Agricultural Innovation Initiative to support knowledge creation and transfer and increased commercialization of agricultural innovations.

– Supporting the transformation of the forestry sector by proposing to provide $60 million in 2011-12 to help forestry companies innovate and tap into new opportunities abroad.

– Extending the temporary 15-per-cent Mineral Exploration Tax Credit for an additional year (until March 31, 2012) to continue to help companies raise capital for mineral exploration.

4:52 p.m. EST: The Federal Government today legislated a permanent annual investment of $2 billion in the Gas Tax Fund to help provide long-term infrastructure funding for municipalities. Other public infrastructure measures include:

– Providing $228 million over three years to fund repairs and major maintenance to federal bridges in Greater Montréal.

– Investing $148 million over the next five years to maintain bridges, dams and other specialized federal assets managed by Public Works and Government Services Canada across Canada.

– Providing up to $72 million over three years for repairs to storm-damaged small craft harbours.

– Contributing $150 million toward the construction of an all-season road between Inuvik and Tuktoyaktuk that completes the Dempster Highway, connecting Canadians from coast to coast to coast.

4:50 p.m. EST: Today the Federal Government introduced legislation to reinforce the stability of Canadian housing finance and strengthen the mortgage insurance regime. It also plans to move forward on the recommendations of the Task Force on Financial Literacy to appoint a Financial Literacy Leader to promote national efforts.

Other measures include a new consumer protection initiative which will ban unsolicited credit card cheques and develop new rules related to network-branded prepaid cards.

4:48 p.m. EST: The Finance Minister is looking to streamline Canada’s trade instruments, including an overhaul of the Customs Tariff legislation to reduce the processing burden for Canadian business. A second measure extends the temporary powers of Export Development Canada to provide financing support to Canadian exporters in the domestic market.

4:45 p.m. EST: The Federal Government has announced it will provide renewed funding of almost $100 million over two years for the research and development of clean energy and energy efficiency. It will also provide $8 million over two years to help deploy clean tech initiatives in Aboriginal and Northern communities.

Other measures include expanding the eligibility for accelerated write-offs for clean energy generation equipment and matching deduction rates for certain intangible expenses such as acquiring resource rights, costs of clearing land or removing overburden prior to excavating a mine, with the rates in the conventional oil and gas sector.

4:43 p.m. EST: Small business incentives include a new one-time Hiring Credit of up to $1,000 against an increase in a small firm’s Employment Insurance (EI) premiums over those paid in 2010 which the Government hopes will encourage hiring.

Other measures include providing $80 million in new funding over three years through the Industrial Research Assistance Program to help small and medium sized businesses accelerate adoption of new technologies through joint projects with colleges.

The government is also aiming to reduce red tape and lessen the compliance burden on small business through the Red Tape Reduction Commission and upgrading the BizPaL service for small businesses.

4:42 p.m. EST: The Federal Government has extended the temporary accelerated capital cost allowance rate for investment in manufacturing and processing machinery and equipment acquired before 2014.

4:40 p.m. EST: Budget 2011 follows through on the Government’s commitment in 2010 to improve the integrity and fairness of the tax system by closing loopholes that allow a few businesses and individuals to avoid paying their fair share of tax. These proposed measures will protect the Government’s revenue base—which helps keep tax rates low—and reaffirm the Government’s ongoing commitment to tax fairness. Of note is that deferrals of partnership income will be limited by requiring corporations that have a significant interest in a partnership with a fiscal period ending on a date different from the corporation’s year-end, to report partnership income on an accrual basis.

4:35 p.m. EST: The Finance Minister in Year 3 of Canada’s Economic Action Plan emphasized sustainable actions for long term prosperity including investments in job creation, support for families and communities, innovation, education and training and a return to balanced budgets without raising taxes. The actions announced today aim to build on the stimulus plan and reinforce Canada’s competitive advantage.

Notable actions include:

  • Providing a one-time Hiring Credit for Small Business of up to $1,000 to encourage hiring
  • $80 million in new funding to help small and medium sized businesses accelerate technology adoption through the Industrial Research Assistance Program
  • Support for seniors by providing top up benefits on the Guaranteed Income Supplement of over $300 million per year
  • Close to $100 million of renewed funding for research and development of clean energy and more than $870 million for Canada’s Clean Air Agenda over two years
  • An overhaul of the Customs Tariff legislation to reduce the processing burden for Canadian business
  • Public infrastructure support through a permanent annual investment of $2 billion in the Gas Tax Fund
  • Support for key industries with targeted actions in agriculture, forestry, mining, manufacturing and processing

PwC Firm Description
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See http://www.pwc.com/ for more information. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,300 partners and staff in offices across the country.

“PwC” is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.

Note to Editors: PwC has changed its name from PricewaterhouseCoopers to PwC in the fall of 2010. ‘PwC’ is written in text with a capital ‘P’ and capital ‘C’. Only when you use the PwC logo is the name represented in lower case.

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