The Honourable William Morneau, Minister of Finance, tabled the government’s 2018 federal budget (Budget 2018) on February 27, 2018 (Budget Day). Borden Ladner Gervais LLP, Taxand Canada, examines the release.
Budget 2018 predicts slowly decreasing deficits and announces spending increases focused on increasing benefits to families, opportunities and equality for women, and funding for science and Indigenous services. Budget 2018 includes little detail addressing the aggressive stances taken on trade negotiations and tax reform by the United States — Canada’s largest trading partner and competitor for business and investment.
The tax measures included in Budget 2018 focus on three themes: shifting the tax burden to wealthier Canadians, reducing tax avoidance opportunities, and promoting compliance. These tax measures include a new iteration of the July 2017 proposals regarding the taxation of passive investment income in private corporations as well as related changes to the refundable dividend tax on hand (RDTOH) regime.
Budget 2018 includes various tax measures that propose to limit what the government views as avoidance opportunities, including in respect of equity-based financial arrangements, tiered partnerships and cross border surplus stripping. As the government seeks to increase compliance, Budget 2018 also proposes changes to reassessment periods and enhanced information sharing.