Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2020: part 4

• Introduced in Budget 1971. Effective for the 1972 and subsequent taxation years.
• Technical legislative changes to move the $200 exception for individuals from subsection 39(2) into subsection 39(1.1) were adopted on June 26, 2013.

• The predecessor Class 34, introduced in 1976, provided an accelerated CCA rate of 50% on a straight-line basis for a range of energy generation and conservation equipment.
• Class 43.1 was introduced in Budget 1994, effective for assets acquired after February 21, 1994.
• Class 43.2 was introduced in Budget 2005, effective for assets acquired after February 22, 2005 and before 2012. Budget 2007 extended the eligibility for Class 43.2 to assets acquired before 2020.
• The range of assets covered by these CCA classes has been expanded several times. Most recently, Budget 2018 extended the eligibility for Class 43.2 to property acquired before 2025.
• The 2018 Fall Economic Statement announced immediate expensing of specified clean energy equipment included in Class 43.1 and 43.2 acquired after November 20, 2018 and put in use before 2024. This measure would be graduallly phased out starting in 2024, and would no longer be in effect for investments put in use after 2027.

• Introduced in 2015 (Prime Minister of Canada news release, February 19, 2015). Effective for capital assets acquired after February 19, 2015 and before 2025.

• The accelerated CCA provided at a rate of 50% on a straight-line basis was introduced in Budget 2007, effective for eligible manufacturing and processing machinery and equipment acquired on or after March 19, 2007.
• Extended in Budgets 2008, 2009, 2011 and 2013.
• Budget 2015 introduced the 50% accelerated CCA on a declining-balance basis, effective for eligible assets acquired after 2015 and before 2026.
• The 2018 Fall Economic Statement announced immediate expensing of machinery and equipment used for the manufacturing or processing of goods included in Class 53 that is put in use before 2024. This measure would be graduallly phased out starting in 2024, and would no longer be in effect for investments put in use after 2027.

• Introduced in Budget 1971, effective 1972.
• Extended in Budget 1996 to in-situ oil sands projects (that is, projects that use oil wells rather than open-pit mining techniques to extract bitumen). This change ensured that both types of oil sands projects are accorded the same CCA treatment. Budget 1996 also extended the accelerated CCA to expenditures on eligible assets acquired in a taxation year for use in a mine or oil sands project, to the extent that the cost of those assets exceeds 5% of the gross revenue for the year from the mine or project.
• Budget 2007 announced the phase-out over the 2011-2015 period of the accelerated CCA for oil sands projects.
• Budget 2013 announced the phase-out over the 2017-2020 period of the accelerated CCA for all other mining projects.

• Introduced in 1967 (Order in Council P.C. 1967-1668). Effective for assets acquired on or after March 23, 1967.

• Introduced in Budget 2019, applicable to eligible zero-emission vehicles acquired on or after March 19, 2019 and that become available for use before 2028.

• Introduced in Budget 1996. Effective for expenditures incurred after December 5, 1996.
• CRCE treatment has been expanded several times as a result of the broadening of the range of assets covered by CCA classes 43.1 and 43.2. Budget 2017 announced the inclusion of a broader range of geothermal energy projects and equipment.

• Budget 1974 introduced CEE as a category distinct from Canadian Development Expenses (CDE).
• Budget 1978 expanded coverage to include certain expenditures relating to the development of a new mine.
• Budget 2011 announced the phasing out by 2016 of the eligibility for CEE of pre-production development expenses for oil sands mines.
• Budget 2013 announced the phasing out by 2018 of the eligibility for CEE of pre-production development expenses for all other mines.
• Budget 2017 announced that expenses incurred after 2018 that are associated with oil and gas discovery wells will be treated as CDE, rather than as CEE, unless and until they are deemed unsuccessful.

• Introduced in the 2018 Fall Economic Statement.

Corporations that donated medicines from their inventory to an eligible charity could claim an additional deduction equal to the lesser of:

• 50% of the amount by which the fair market value of the donated medicine exceeds its cost; and
• the cost of the medicine.

An eligible charity is a registered charity that meets the conditions prescribed by regulation. In particular, the registered charity was required to:

• deliver the medicine received outside Canada;
• act in a manner consistent with the principles and objectives of the Guidelines for Drug Donations issued by the World Health Organization;
• have expertise in delivering medicines to the developing world; and
• implement appropriate policies and practices with respect to the delivery of international development assistance.

• Introduced in Budget 2007. Effective for gifts made on or after March 19, 2007.
• Amended in Budget 2008 to ensure that the charities to which the medicines are donated have appropriate oversight and accountability practices.
• Budget 2017 announced the elimination of the measure, effective for gifts made on or after March 22, 2017.

• Introduced in Budget 2005. Effective for the 2005 and subsequent taxation years.
• Budget 2013 extended the adoption period to allow for the eligibility of additional adoption-related expenses (e.g., fees for a mandatory home study and adoption courses).
• Budget 2014 increased the maximum eligible expenses claimable to $15,000.

• Introduced as part of the 1987 Tax Reform, effective for the 1988 and subsequent taxation years, to replace the previous age exemption.
• The 2006 Tax Fairness Plan increased the Age Credit amount by $1,000 to $5,066 effective for the 2006 taxation year.
• Budget 2009 increased the Age Credit amount by $1,000 to $6,408 (indexed thereafter).

• Introduced in Budget 2001. Effective for tools acquired after 2001.
• In Budget 2007, the threshold for recognition of tool costs was integrated with the new deduction for tradespeople’s tool expenses and Canada Employment Credit.

• Introduced in Budget 2006. Effective in respect of salaries and wages paid to qualifying apprentices on or after May 2, 2006.

• Introduced in Budget 1977.
• Budget 2012 announced the reduction of the credit rate from 10% to 5% for assets for use in oil and gas and mining activities acquired in 2014 and 2015. The tax credit ceases to be available for such assets acquired after 2015.

• $7,140 in respect of infirm dependants who are parents/grandparents, brothers/sisters, aunts/uncles, nieces/nephews, adult children of the claimant or of the claimant’s spouse or common-law partner;
• $2,230 in respect of an infirm dependent spouse or common-law partner in respect of whom the individual claims the spouse or common-law partner amount, an infirm dependant for whom the individual claims an eligible dependant credit, or an infirm child who is under the age of 18 years at the end of the tax year.

• Introduced in 2017, effective for the 2017 and subsequent taxation years.

• The Child Tax Benefit (the precursor to the Canada Child Tax Benefit) was introduced in Budget 1992 and replaced, effective January 1993, the former refundable child tax credit, family allowance and non-refundable tax credit.
• The Canada Child Tax Benefit and National Child Benefit supplement were introduced in 1998. The Child Disability Benefit was introduced in 2003.
• The Canada Child Benefit was introduced in Budget 2016 and replaced the Canada Child Tax Benefit, including the National Child Benefit supplement, and the Universal Child Care Benefit. Payments of the Canada Child Benefit began in July 2016.
• The 2017 Fall Economic Statement introduced the indexation to inflation of the maximum benefit amounts and phase-out thresholds for the Canada Child Benefit as of the 2018-19 benefit year, rather than as of the 2020-21 benefit year as was legislated. The Child Disability Benefit is also indexed to inflation as of the 2018-19 benefit year.
• Budget 2018 granted retroactive eligibility for the Canada Child Tax Benefit, the National Child Benefit supplement and the Universal Child Care Benefit to foreign-born individuals who are Indians under the Indian Act who reside legally in Canada but are neither Canadian citizens nor permanent residents, where all other eligibility requirements are met, from the 2005 taxation year to June 30, 2016.
• Budget Implementation Act, 2018, No. 2 clarified that an individual caring for a child under a kinship care program is eligible for the Canada Child Benefit in respect of that child, regardless of whether they receive financial assistance from a government under such a program (provided all other eligibility requirements are met).

• Introduced in Budget 2006. Effective July 1, 2006. The maximum amount in 2006 was $500, doubling to $1,000 on January 1, 2007.

• Introduced in Budget 2019. The annual accumulation to the notional account became effective in respect of the 2019 taxation year, and the credit will be available to be claimed for expenses in respect of the 2020 taxation year.

• Introduced in Budget 2007. Effective for the 2007 and subsequent taxation years (2008 and subsequent taxation years in respect of advance payments).
• Enhanced in Budget 2009 for the 2009 and subsequent taxation years.
• Budget 2018 introduced the new Canada Workers Benefit, which replaced the WITB in 2019.

• Introduced in Budget 1995 at a rate of 25% of the cost of eligible salaries and wages incurred after 1994 and up to a maximum of 12% of the total cost of production. It replaced the film tax shelter mechanism for certified Canadian films in place prior to 1995.
• The maximum amount of the credit was increased to 15% of total production cost for productions, effective for expenditures incurred on or after November 14, 2003. 
• Talk shows were made eligible for the Canadian Film or Video Production Tax Credit by removing the reference to “talk shows” from the definition of “excluded production” for the purposes of the credit. This change applies to productions for which the principal photography starts after February 16, 2016.

• Introduced in Budget 2019, applicable to salary or wages earned in respect of a period on or after January 1, 2019.

• Introduced in Budget 1971. Effective for the 1972 and subsequent taxation years.
• Budget 2000 introduced rules that prevent the $1,000 deemed adjusted cost base and deemed proceeds of disposition for personal-use property from applying if the property is acquired after February 27, 2000 as part of an arrangement or scheme in which the property is donated as a charitable gift.

• Introduced in Budget 1971. Effective for the 1972 and subsequent taxation years.
• Budget 1983 extended the carry-back for capital losses from one year to three years.

• Introduced in 1998. Effective for the 1998 and subsequent taxation years. Repealed in Budget 2017 as of the 2017 taxation year.

• Prior to 1948, cash basis accounting was an acceptable method for determining business income for tax purposes. Amendments to the Income Tax Act in 1948 introduced the concept of profit and the use of accrual accounting, but at the same time preserved the ability of taxpayers who had been using cash basis accounting to continue to use that method.
• In 1955, a provision specifically allowing farmers to use cash basis accounting was introduced.
• In 1958, the provision preserving the ability for other taxpayers to continue to use cash basis accounting was repealed.
• The optional inventory adjustment was implemented in Budget 1973, effective for the 1972 and subsequent taxation years.
• In 1980, cash basis accounting was confirmed for fishers on a retroactive basis to 1972.
• The mandatory inventory adjustment was introduced following the 1987 Tax Reform (Department of Finance Canada news release 88-89, June 30, 1988), effective for fiscal years commencing after 1988.
• In 1996, a provision was introduced to prevent prepaid expenses (other than for inventory) relating to a taxation year at least two years after the year of payment from reducing cash basis income in the year of payment. This provision was effective for amounts paid after April 26, 1995.

• Introduced in 1917 as a deduction “for amounts paid during the year to the Patriotic and Red Cross Funds, and other patriotic and war funds approved by the Minister.”
• The general income limit on donations was increased in several stages from 10% in 1970 to 75% in 1997.
• In 1988, the deduction for donations made by individuals was converted to a two-tier tax credit as part of the 1987 Tax Reform.
• Budget 1994 reduced the threshold to which the higher rate applies from $250 to $200.
• Budget 1995 eliminated the net income limit for donations of ecologically sensitive land eligible for the tax credit.
• In Budget 2014, the carry-forward period for donations of ecologically sensitive land was extended from 5 to 10 years.
• In 2016, the Government amended the Charitable Donation Tax Credit to allow donors with taxable income that is subject to the 33% marginal tax rate to also claim a 33% tax credit on the portion of donations (greater than $200) made from that income. Any donations that exceed the amount of a donor’s taxable income that is subject to the 33% marginal tax rate will be subject to the 29% credit rate. This change is effective for the 2016 and subsequent taxation years.
• Budget 2019 added registered journalism organizations as a new category of tax-exempt “qualified donees” as referred to in the Income Tax Act. To be a registered journalism organization, an organization must apply to the Canada Revenue Agency and meet certain criteria, including being a Qualified Canadian Journalism Organization having purposes exclusively related to journalism. These organizations are not permitted to distribute their profits, if any, or allow their income to be available for the personal benefit of certain individuals connected with the organization.

• Announced in Budget 1971. Legislation introduced in 1972 and effective for the 1972 and subsequent taxation years.
• Budget 1988 eliminated the overall maximum limit of $8,000 per taxpayer for child care expenses.
• Budget 1996 increased the age limit for children from 14 to 16 years.
• Maximum dollar amounts increased by $1,000, effective for the 2015 taxation year (Prime Minister of Canada news release, October 30, 2014).

• Introduced in Budget 2007. Effective for the 2007 to 2014 taxation years.
• Repealed as of the 2015 taxation year, and replaced by the enhancement to the Universal Child Care Benefit (Prime Minister of Canada news release, October 30, 2014).

• Introduced in Budget 2011. Effective for the 2011 and subsequent taxation years ($500 maximum amount per child for eligible fees).
• Budget 2016 reduced the maximum amount of eligible fees to $250, effective for the 2016 taxation year, and eliminated the credit effective for the 2017 taxation year.

• Introduced in Budget 2006 as a non-refundable tax credit. Effective for the 2007 and subsequent taxation years ($500 maximum amount per child for eligible fees).
• Guidelines were released in 2006 on the credit and enhancement of the credit for children with disabilities (Department of Finance Canada news release 2006-084, December 19, 2006).
• The maximum amount of the credit was doubled to $1,000, effective for the 2014 taxation year, and the credit was made refundable, effective for the 2015 taxation year (Prime Minister of Canada news release, October 9, 2014).
• Budget 2016 reduced the maximum amount of eligible fees to $500, effective for the 2016 taxation year, and eliminated the credit effective for the 2017 taxation year.

• Introduced in Budget 2003. The credit applied at a rate of 5% in 2003, 7% in 2004 and 10% as of 2005.
• Budget 2012 announced the phase-out of this credit. In the case of exploration expenditures, the credit rate was reduced to 5% for expenses incurred in 2013 and is not available for expenses incurred after 2013. In the case of pre-production development expenditures, the credit rate was reduced to 7% for expenses incurred in 2014, 4% for expenses incurred in 2015, and is not available for expenses incurred after 2015.

• Introduced in Budget 2019, effective in respect of eligible amounts paid after 2019 and before 2025.

• Introduced as part of the 1987 Tax Reform, effective for the 1988 and subsequent taxation years, to replace the previous basic personal exemption.
• Between 1998 and 2009, the Basic Personal Amount was periodically increased. 
• In December 2019, the Government announced its intention to increase the Basic Personal Amount to $15,000 by 2023. The increase will be gradually implemented from 2020 to 2023 through annual increases in excess of inflation. The new, increased portion of the credit will be subject to an income test beginning at a level of individual net income equal to the fourth federal tax bracket threshold ($150,473 in 2020), and be fully phased out by the fifth federal bracket threshold ($214,368 in 2020). 

• Introduced in 1987 as part of the 1987 Tax Reform. Effective for the 1988 and subsequent taxation years.

• Budget 1930 introduced the deductibility of donations to any church, university, college, school or hospital in Canada amounting to no greater than 10% of a taxpayer’s net income. By 1933, the deduction applied to donations made to charities.
• Budget 1997 increased the deduction limit to 75% of a corporation’s net income, reduced to 25% the portion of taxable capital gains arising from the donations of appreciated capital property that can be added to the deduction limit, and added to the deduction limit 25% of recaptured capital cost allowance amounts.

• Introduced in Budget 1994. Effective for contributions to eligible mine reclamation trusts for taxation years ending after of February 22, 1994.
• Budget 1997 extended this measure to similar trusts established for waste disposal sites and quarries for the extraction of aggregate and similar substances, effective for taxation years ending after February 18, 1997.
• Budget 2011 further extended this measure to include trusts established for pipeline reclamation, effective for taxation years ending after 2012.

• Introduced in 1990, applicable to property acquired after 1989.

• Introduced in Budget 1998. Effective for duties that became payable and are paid after February 23, 1998.

• Introduced in Budget 1998. Effective for the 1998 and subsequent taxation years.

• Introduced on May 16, 1990 (Government response to the Report of the Standing Committee on Communications and Culture Respecting the Status of the Artist). Effective for amounts paid after 1990.

• Introduced in 1949. Effective for the 1949 and subsequent taxation years.

• Introduced in Budget 1949. Effective for the 1948 and subsequent taxation years.
• In 2001, the amount of the deduction when the living accommodation is rented or owned by the clergy was limited to the least of three amounts: the clergy person’s total remuneration from employment for the year; one-third of that remuneration or $10,000, whichever is greater; and the fair rental value of the residence (reduced by other amounts deducted in connection with the same residence). 

• Introduced in Budget 1985. Effective for the 1985 and subsequent taxation years.

• Introduced in Budget 2006. Effective in respect of eligible new tools acquired on or after May 2, 2006.

• Introduced in Budget 2001. Effective retroactively to the 1997 and subsequent taxation years.

• Introduced in Budget 1978 (November 16, 1978). Effective for the 1978 and subsequent taxation years.

• Interest on borrowed funds used to earn income was made deductible in 1923, and investment counselling fees in 1951. Interest incurred by corporations to buy shares of other corporations was made deductible in 1972.
• Budget 1996 introduced amendments to ensure that fees to establish child support amounts remained deductible.
• Budget 2013 removed the deduction in respect of safety deposit box charges for taxation years that began on or after March 21, 2013.

• Introduced in Budget 1951. Effective for the 1951 and subsequent taxation years.

• These measures were introduced at various times (1948 for rules related to the recapture of excess capital cost allowance, 1958 for amalgamations, 1972 for capital gains on a transfer of an asset to a corporation and for a corporate winding-up, and 1980 for corporate butterflies).

• Implemented in Budget 1973. Effective for the 1972 and subsequent taxation years.
• Budget 2001 ensured that the existing intergenerational tax-deferred rollover for farm property is available for transfers of commercial woodlots after December 10, 2001, where they are operated in accordance with a prescribed forest management plan.
• Budget 2006 extended this measure to include qualified fishing property effective May 2, 2006.
• Budget 2014 extended the measure to generally treat a taxpayer’s combined farming and fishing business the same as separate farming and fishing businesses conducted by the same taxpayer, applicable to dispositions and transfers that occur in the 2014 and subsequent taxation years.

• Introduced in Budget 1971. Effective for the 1972 and subsequent taxation years.
• Extended in 2001 to transfers to alter ego trusts (Department of Finance Canada news release 1999-112, December 17, 1999).

• Introduced in Budget 1976. Effective for the 1976 and subsequent taxation years.

• Introduced in Budget 1974. Effective for the 1973 and subsequent taxation years.
• Consequential amendments to this measure due to the elimination of the Canadian Wheat Board were made in 2012 (first Budget 2012 implementation bill). These amendments removed the previous geographical restriction for the measure and extended it to farmers of the listed grains anywhere in Canada.
• Budget 2017 launched a consultation on the ongoing utility of this measure. On November 6, 2017, the Government announced that the income deferral provided under this measure would be maintained.

• Introduced in 1988 in respect of farmers forced to sell breeding livestock due to drought conditions (Department of Finance Canada news release 88-155, December 12, 1988). Effective for the 1988 and subsequent taxation years.
• Expanded in March 2009 to apply to farmers carrying on business in a region of flood or excessive moisture (Department of Finance Canada news release 2009-024, March 5, 2009). Effective for the 2008 and subsequent taxation years.
• Budget 2014 extended the measure to bees, and to all types of horses that are over 12 months of age, that are kept for breeding. Effective for the 2014 and subsequent taxation years.

• Budget 1981 proposed the elimination of capital gain reserves; however, this original proposal was later modified to allow a five-year reserve generally and to introduce the 10-year capital gain reserve for a transfer to a child (Department of Finance Canada news release 81-126). Effective for dispositions of property occurring after November 12, 1981.
• Budget 2006 extended the scope of the measure to include fishing property.
• Budget 2014 introduced simplifying rules for farmers carrying on farming and fishing businesses in combination.

• Budget 1981 proposed the elimination of capital gain reserves; however, this original proposal was later modified with the introduction of the five-year capital gain reserve (Department of Finance Canada news release 81-126). Effective for dispositions of property occurring after November 12, 1981.

• The deferral of capital cost allowance recapture was introduced in 1955. Effective for the 1954 and subsequent taxation years.
• The capital gains deferral was introduced in Budget 1971. Effective for the 1972 and subsequent taxation years.

• The deferral of capital cost allowance recapture was introduced in 1955. Effective for the 1954 and subsequent taxation years.
• The deferral of capital gains was introduced in Budget 1971. Effective for the 1972 and subsequent taxation years.

• Introduced in Budget 1971. Effective for fiscal years ending after December 31, 1971.
• Budget 2017 eliminated the ability for designated professionals to elect to use billed-basis accounting, effective for taxation years that begin on or after March 22, 2017. A five-year transitional period to phase in the inclusion of work in progress into income was also introduced.

• In 1961, amendments were introduced to provide that an employee would not be subject to income tax on amounts contributed to a profit-sharing plan on their behalf by their employer until actually received as proceeds from the plan.
• In 1989, a number of amendments to the DPSP tax rules were introduced that, among other changes, increased the limit on deductible employer contributions and prohibited employee contributions (Saving for Retirement: A Guide to the Tax Legislation and Regulations, Department of Finance Canada, 1989).  

• Introduced in Budget 2004, effective for the 2004 and subsequent taxation years, replacing the previous attendant care deduction.

• Introduced in 1944 as a $480 deduction for blind persons.
• Expanded in 1985 to individuals with severe disabilities.
• Replaced by a non-refundable tax credit as part of the 1987 Tax Reform.
• Introduction in 2000 of the supplement for children.
• Budget 2005 extended eligibility to individuals who face multiple restrictions that together have a substantial impact on their everyday lives and to more individuals requiring extensive life-sustaining therapy on an ongoing basis.
• Budget 2017 expanded the list of medical practitioners that can certify eligibility for the Disability Tax Credit to include nurse practitioners, effective for certifications made on or after March 22, 2017.

• Introduction of a DTC in 1949, followed by an increase of the tax credit in 1953.
• The 1971 Tax Reform introduced the gross-up factor and adjustments to the DTC effective for the 1972 and subsequent taxation years.
• Budgets 1977 and 1986 as well as the 1987 Tax Reform announced changes to the gross-up and DTC.
• Budget 2006 established, for dividends paid after 2005, a new gross-up factor and an enhanced DTC rate for eligible dividends.
• Budget 2008 adjusted the enhanced DTC and gross-up factor to reflect the scheduled federal general corporate income tax rate reductions that were announced in the 2007 Economic Statement.
• Budget 2013 adjusted the gross-up factor and DTC rate applicable to non-eligible dividends to ensure the appropriate tax treatment of such dividends.
• Budget 2015 adjusted the gross-up factor and DTC rate applicable to non-eligible dividends in conjunction with reductions in the preferential income tax rate for small businesses.
• Budget 2016 announced that the gross-up factor and DTC rate applicable to non-eligible dividends would remain at 17% and 10.5% respectively after 2016.
• The 2017 Fall Economic Statement adjusted the gross-up factor and DTC rate applicable to non-eligible dividends in conjunction with reductions in the preferential income tax rate for small businesses.