The most recent Federal Budget was released on February 11, 2014. The Budget contained a variety of measures but we wanted to briefly outline several items regarding business tax, personal tax and GST that will be of our interest to our personal and business accounting clients throughout the Okanagan.
Business Tax Measures
Replacement of Eligible Capital Property (ECP) rules
Eligible Capital Property is a type of expenditure incurred to acquire rights or benefits of an intangible nature. The most notable type is when goodwill is acquired as part of a business purchase. The Budget proposes to simplify the mechanism for writing off this type of expenditure for tax purposes as well as changing the rate at which it can be written off.
Remittance Thresholds for Employer Source Deductions
Employers are required to remit payroll deductions on a more frequent basis if their average source deductions exceed certain thresholds. The Budget proposes to increase the threshold level of average monthly withholdings which required a twice monthly remittance to $25,000 from $15,000 and the threshold level that required four times per month remittances to $100,000 from $50,000.
Tax Incentives for Clean Energy Generation
Certain types of assets used to generate “Clean” energy will be able to be written off at an accelerated depreciation rate for tax purposes of 50% on a declining balance basis.
Personal Tax Measures
Graduated Tax Rates of Trusts and Estates
The Budget proposes to do away with graduated tax rates for trusts and estates. Previously, a trust created by a person’s will benefited from a low set of tax rates. However, this type of planning is no longer available. Two exceptions will exist, they are the first 36 months of an individual’s estate as a consequence of their death and trusts that have individual beneficiaries who are eligible for the federal disability tax credit.
Donations by an Estate
After 2015, designated charitable donations made in a person’s last will and testament will no longer be deemed to be made immediately before a person’s death. Rather, these donations will be considered to be made by the person’s estate and the trustee of the estate can apply any available tax credit to the Estates tax, and earlier year of the estate or the last two taxation years of the individual prior to their death.
Adoption Tax Credit
A proposal to increase the maximum amount of eligible expenses to $15,000 per child for 2014 was included in the Budget.
Medical Expense Tax Credit (METC)
The Budget proposes that amounts paid for the design of an individualized therapy plan will be eligible for the METC if the plan is required to access public funding for specialized therapy and the plan recipient is eligible for the Disability Tax Credit.
Search and Rescue Volunteers Tax Credit
A $450 tax credit to eligible search and rescue volunteers that perform at least 200 hours of volunteer service in any tax year will be available.
Personal GST Credit
It will no longer be necessary for individuals to apply for their GST credit. Canada Revenue Agency will automatically determine if an individual is eligible to receive the credit.
Health Care Sector
Certain medical professionals, specifically acupuncturists and naturopathic doctors, will no longer be required to charge patients GST. In addition, services to design training plans for individuals with a disorder or disability will be exempt from GST as well as certain electronic based corrective eyewear.
If you have any questions about how to best implement a retail inventory management system for your business please contact one of our accounting professionals in Penticton, Osoyoos or West Kelowna at White Kennedy LLP.
Written by Peter MacIntosh, Partner, White Kennedy LLP
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.