Please note that these publications may not be up-to-date as taxation matters are subject to frequent changes.
2003 FEDERAL BUDGET TAX HIGHLIGHTS
On February 18, 2003, the Minister of Finance released a number of proposed tax changes. We summarize the more significant ones in this commentary.
- Standby Charge for Cars
When an employee uses a corporate car, a taxable benefit (called the standby charge) is applied to the employee to represent the personal benefit of having the use of that car. This applies whether the car is owned or leased. The annual taxable benefit...
- Small Business Deduction
Canadian-controlled private corporations (CCPC) have enjoyed a reduced federal tax rate on up to $200,000 of active business income annually. The amount eligible for this so-called small business deduction was set at $200,000, and has not been increased...
- Federal Capital Tax
At present, there is a federal capital tax of . 225%. While this is a small percentage, the tax is $225,000 on taxable capital of $100 million. This tax is not deductible. Capital taxes have long been criticized as an impediment to business, especially in...
- Interest Deductibility
In the Budget, it states that legislative amendments are going to be considered with regard to interest deductibility. It appears that the government is not pleased with recent Supreme Court cases such as Ludco and Singleton, where the taxpayer was able...
- Share-for-Share Exchanges
If a Canadian resident owns shares of a Canadian corporation and exchanges these for shares of an other Canadian corporation (say in a takeover bid), this can be done on a tax-free basis. Ironically, shares of a foreign corporation may be exchanged for...
- Tax Shelters
At present, a tax shelter is defined as any property in respect of which it is represented that a potential purchaser will be able to claim, within four years, deductions from taxable income which equal or exceed the net cost of the property. If a...
- Other Proposals
Listed below are some other brief points of interest. RRSP limits will be increased in 2003 to $14,500 and will then increase by $1,000 per year until 2005, and increase $1,500 in 2006. There was some easing of the rules on...