Budget 2021 proposed measures to encourage Canadian Controlled Private Companies to purchase certain capital property by offering accelerated tax depreciation. In more cases, the impact will be to triple the amount of expense that can be claimed in the first year relating to these types of purchasers. For certain machinery and equipment used in manufacturing, full expensing is allowed. These measures for purchases made between April 19, 2021 and December 31, 2023, up to a maximum of $1.5M/year among an associated group of companies. If the full $1.5M is not used in a year, the difference does NOT carry forward. It should be noted that this does not represent a pure tax savings to eligible companies, but rather a deferral of tax to future years.
Tax circles have been buzzing over the recent changes to the Income Tax Act relating to Bill C-208 which aims to put private company share sales to children and grandchildren on level footing with private company share sales to external third parties. Prior to these changes, certain private company owners would have to sell their company’s shares to non-family members to realize their Lifetime Capital Gains Exemption (“LCGE”) – which could amount to significant tax savings depending on the type of company being sold:
One of the most frequent questions we receive is, “when is my U.S. tax return due?” Unlike Canada, which has very few exceptions to the filing deadline of April 30th, the U.S. system has many.
On May 19, 2021, the Government of Alberta announced the new Alberta Jobs Program aimed at helping private and not-for-profit businesses support for hiring unemployed or underemployed Albertans.
With all the spending measures and no revenue raising measures, many in the tax community were taken off-guard by this budget. There were various rumors about how the government might pay for accumulating more national debt in 2 terms than all other governments in Canada’s history combined. We were expecting increases to corporate tax rates, an increase in the capital gains inclusion rate, a one-time wealth tax, or changes to the principal residence exemption, or a combination of these.