New tax revenue streams, deficit spending, central themes in Federal Budget 2021
RSM Canada provides perspectives on proposed tax and economic measures
RSM Canada, the leading provider of audit, tax and consulting services focused on the middle market, issued key perspectives for Canada’s middle market businesses following today’s much-anticipated Budget 2021.
As part of its highly anticipated budget unveiling, the Government of Canada laid out key tax policy changes aimed at creating new sources of federal revenue, including limits on interest payment deductions, a digital services tax on large technology corporations at a rate of three per cent of revenue, and a luxury tax on high-cost items.
In a move to cool a hot property market, the government also announced plans for a tax on non-resident, non-Canadian owned vacant properties. The budget did not include any significant changes to personal taxes, nor did it include an increase in the GST or the creation of a wealth tax.
“The deficit spending outlined in this year’s federal budget hinges on full recovery of the Canadian economy over the next few years. It also leans heavily on new sources of revenue with new taxes and a focus on protecting Canada's tax base – including a national tax on vacant property owned by non-Canadian non-residents, a luxury tax on big-ticket items and a digital services tax.” explains Maria Severino, national tax leader at RSM Canada.
Additional plans include robust new measures aimed at increasing fairness, such as:
- Enhanced reporting requirements
- Enhanced audit power for the Canada Revenue Agency
- Extended reassessment period in certain circumstances
In addition, the government also laid out plans to continue support for small and medium-sized businesses, including:
- Extension of the wage subsidy (CEWS) and rent subsidy (CERS) programs
- Canada-wide hiring program to make it easier for businesses to hire back laid off employees or bring on new ones
- Canada Recovery Benefit extended
- Reform the current Employment Insurance (EI) program
Alex Kotsopoulos, partner, projects and economics, at RSM Canada, added, “With more than 200 new spending measures, including new and extended business aid programs and income support, Canada’s small to medium-sized businesses remain at the forefront of our country’s economic recovery. Support for them through programs like the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy and Lockdown Support recognize just how important these businesses are to creating jobs and growth.”
For more information about the Federal Budget’s implications for Canada’s middle market, visit our Budget Commentary Resource Centre.
About RSM Canada
RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business environment.
RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms with more than 48,000 people in more than 120 countries. RSM Alberta LLP is a limited liability partnership and independent legal entity that provides public accounting services. RSM Canada Consulting LP provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. For more information visit rsmcanada.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.