2016 Budget Overview: Additional Tax Measures

Review additional tax measures announced by the Government in the 2016 Federal Budget.

Top Marginal Income Tax Rate – Consequential Amendments

The following provisions will reflect the 33% top marginal tax rates

• Charitable donations tax credit for donations made after 2015 (individuals and trusts to the extent that their income is taxed at 33%)
• Excess employee profit sharing plan contributions
• Personal services business income earned by corporations
• Other changes include capital gains refund mechanism for mutual fund trusts

GST Relief – Insulin Pens and pen needles will be added to the list of zero-rated drugs as of Budget Day.  Also intermittent urinary catheters have made the list if supplied on a written order of a medical doctor, registered nurse, occupational therapist or physiotherapist.

Purely Cosmetic Procedures provided by all suppliers including registered charities will continue to be subject to GST/HST.  However reconstruction due to congenital abnormalities or personal injuries resulting from an accident or trauma or a disfiguring disease continue to be exempt.  Exempt also are cosmetic procedures paid for by a provincial health insurance plan.

Grand-parented Housing Sales.  Where a province either joined the HST system since 2010 or increased its HST rate, sales of some newly constructed or substantially renovated homes were grand-parented for HST purposes, meaning they were exempted from the new tax.  Reporting rules for builders will now be simplified by limiting reporting requirements to sales equal to or greater than $450,000 and by providing an opportunity to correct past reporting errors and omissions with an election to report all past grand-parented sales in this value zone.  This will apply for supplies payable on or after July 1, 2010.  The election must be made between May 1, 2016 and December 31, 2016.

GST and Charities.  Where property or services are supplied in exchange for recognition of a donation to charity there are split receipting rules.  The charity may issue a donation receipt for the amount paid by the donor less the value of property or services the donor receives.  In this case, GST/HST will apply only to the property or services supplied, unless the goods are already exempt.

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