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2013 Canadian federal budget

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Taxation

There were no new tax measures or tax reductions in the proposed budget bill, but some tax loopholes were eliminated, which is expected to generate an additional $880 million in tax revenues annually.

Tariffs

As a result of the 2013 budget, import tariffs for 37 goods were eliminated—specifically sporting goods (excluding bicycles) and baby clothing made of "cotton, synthetic fibres, textile materials, wool or fine animal hair". Such cuts were expected to result in decreased tax revenues of $76 million for the Government of Canada.

Tariffs on other goods in 1290 product classes were increased owing to a change in status classification of 72 trading nations from "developing" status to "fully developed". Imports from nations including Brazil, China, India, Indonesia, and Russia were affected by reclassification, as they were no longer subject to the general preferential tariff (GPT). The average increase was 3%, and would result in $333 million annually in additional tax revenues for the Canadian government. The tariffs took effect 1 January 2015. Doug Porter, the chief economist of the Bank of Montreal, expressed concern about adverse effects, commenting that such increases would widen the disparity in prices of goods in Canada compared to the same goods in the United States, which may aggravate cross-border shopping. The budget also provided that rules of origin would be amended "to ensure imported textiles and apparel from poorer nations" would not be affected if their manufacture requires materials from promoted nations.

Some goods affected by these tariff increases included solid-state drives and USB devices (from no tariff to 6%), most of which are imported from China, South Korea, Thailand and Malaysia, four of the nations losing GPT status.

Tax evasion

The budget proposal included a reward system for individuals who report Canadians with an offshore account, and eliminated the tax deduction for leasing a safe deposit box. The Stop International Tax Evasion Program enabled the Canada Revenue Agency to reward informants up to 15% of taxes collected if it exceeds $100,000. Critics complained that a planned $60 million cut of the CRA budget and its limited resources imply the CRA would not be able to investigate or pursue tax evaders. Another criticism was that the reward may be too small, or that most rewards may be accrued by non-Canadians working in offshore institutions. Walid Hejazi of the Rotman School of Management said that the program is unlikely to generate much revenue, but may act as a deterrent for some potential tax evaders.

Personal taxes

There was an increase in the lifetime capital gains exemption to $800,000, which was indexed to inflation, a reduction of the dividend tax credit, and elimination of the use of financial strategies such as loss trading and synthetic disposition. The budget introduced measures requiring financial institutions to report any electronic fund transfer exceeding $10,000.

Corporate taxes

The capital cost allowance (CCA) for manufacturing and processing equipment was extended to the end of 2015. The budget also allocated $60 million over five years for use by incubator and accelerator investment organizations, and $70 million over three years to create 5,000 internship positions for recent post-secondary graduates.

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