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Federal Budget 2012 – What’s in it for You?


Although every penny counts on Canada's return to balanced budgets, when introducing Budget 2012, the Finance Minister announced the elimination of the penny - Canada will stop making them. The Budget does not increase tax rates, but it does propose a number of technical tax changes that will result in $3,5 billion in additional tax revenue over five years. Taxand Canada summarises some of the key changes to the Canadian tax rules proposed in Budget 2012.

Budget 2012 proposes special tax payable by "specified employees" on "excess EPSP amounts. Employees who have a significant equity interest in the employer or who do not deal at arm's length with the employer will be affected to the extent contributions exceed 20% of the employee's salary for the year.

Taxand Canada looks at Budget 2012 in greater detail

Taxand's Take

Budget 2012 proposes amendments to alleviate the tax cost to Canadian banks of using excess liquidity of their foreign affiliates in their Canadian operations. These amendments affect the so-called "base erosion" rules in the foreign accrual property income regime applicable to "upstream loans".

Budget 2012 also proposes that the Minister of National Revenue will have a discretion to accept a late designation of an eligible dividend if the late filed designation is filed within three years following the date the designation should have been made.

Budget 2012 introduces changes that will include the amount of an employer's contributions to a group sickness or accident insurance plan in an employee's income for the year in which the contributions are made to the extent that the contributions are not in respect of a wage-loss replacement benefit payable on a periodic basis.

Your Taxand contact for further queries is:

Tim Wach
T. +1 416 369 4645

Taxand's Take Author