Canada Plans Tax Cuts, Downgrades Budget Surplus

April 22, 2015 Taxation in Canada

OTTAWA – Canada is reducing the forecast for its budget surplus for the next five years in order to accommodate a raft of new tax breaks.

On April 21st the Minister of Finance of Canada Joe Oliver detailed the national budget plan for the coming fiscal year, describing several new tax breaks for businesses and families.

The Minister announced that from 2016 the tax rate faced by small businesses will be gradually reduced from the current level of 11 percent to a final level of 9 percent in 2019, a move which is expected to reduce tax revenues by a total of CAD 2.7 billion over the next five years.

Further, manufacturing businesses will enjoy an extension to accelerated capital cost allowances, while annual contributions for tax-free savings will be doubled.

The government will also enact previously promised tax cuts and benefits specifically targeted at families, at a total cost of CAD 27 billion over the coming five years.

In order to accommodate the new spending the government has slashed the outlook for its future surpluses, reducing the cumulative amount of surplus by CD 18 billion over the next five years.

Photo By: Duckie Monster