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Finance Minister Bill Morneau introduced the Liberal government’s second federal budget on Tuesday, March 22. The 2017 Federal Budget emphasized innovation and supporting the middle class while offering few significant tax changes.
The Liberal government announced a new National Housing Strategy, which includes an $11.2-billion investment over 11 years for a number of initiatives designed to increase Canada’s stock of affordable housing.
Key elements of the strategy include:
The fund is meant to address critical housing issues for vulnerable Canadians, including seniors, Indigenous Peoples, people with disabilities and veterans. One of the main points of the initiative is to encourage greater collaboration and investment in housing.
To do so, a co-investment fund will be established to pool resources among public, private and community partner to prioritize large-scale community renewal projects.
Other points include:
The new National Housing Strategy also outlines making more federal lands available for the development of affordable housing. This initiative will invest $202-million over the next 11 years to make surplus federal lands and buildings available to housing providers at low or no cost for the development of affordable housing.
The initiative includes funding to top up the existing Surplus Federal Real Property of Homelessness Initiative in 2017-2018, and a new expanded initiative starting in 2018-2019 which will also provide funding for environmental remediation and for renovations or retrofits needed to ensure the surplus federal buildings are inhabitable.
While anticipated changes to the capital gains rate were not included in the budget, it does not mean that there will not be a change. Tax legislation can be introduced at any time throughout the year without advance warning, therefore taxpayers, particularly those involved with real estate and construction, should still be on high alert that a change may occur in the future.
The Budget highlighted tax planning strategies using private corporations that can inappropriately reduce personal taxes of high-income individuals and consequently, provide them with tax advantages. These include:
Sprinkling income using private corporations, which can reduce income taxes causing income that would otherwise be realized by a high personal tax rate individual to be realized by a low personal tax rate family member; and
Converting income distributed from a private corporation to an individual, which is usually in the form of dividends, into capital gains, which can significantly lower the related personal taxes given taxes in applicable to capital gains are significantly lower than dividends.
The federal government intends to release a paper in the coming months setting out the nature of the related issues in more detail as well as proposed policy responses.
MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our Real Estate and Construction clients by investing our time and resources into fully understanding this dynamic and complex industry. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world.
For more information on how the 2017 Federal Budget might impact your business, contact:
Lee Thiessen, National Leader, Real Estate and Construction
E: [email protected]
Glenn Willis, CPA, CA, CPA, CMA
E: [email protected]
Client Groups:Real Estate ＆ Construction
Related Topics:Budget Announcements
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