2015 FEDERAL BUDGET HIGHLIGHTS
Business Tax Changes
Decrease in Small Business Income Tax Rate
The federal small business income tax rate that applies to the first $500,000 of active business income of a
Canadian controlled private corporation will be reduced from 11% to 9% over 4 years. In Ontario, the combined
small business tax rates will be as follows:
 January 1, 2016 – 15.0%
 January 1, 2017 – 14.5%
 January 1, 2018 – 14%
 January 1, 2019 – 13.5%
Accelerated CCA for Manufacturing and Processing Equipment
The temporary 50% straight line CCA rate (class 29) on manufacturing and processing equipment that ends on
December 31, 2015 will be replaced by a new class 53. Manufacturing and equipment assets acquired after 2016
and before 2026 will be included in new Class 53, which will have a CCA rate of 50% on a declining balance basis.
Assets acquired after 2025 will be included in Class 43, which will have a 30% CCA rate on a declining balance basis.
Personal Tax Changes
Increase in Non-Eligible Dividend Tax Rates
The budget proposes to increase the effective tax rate on non-eligible dividends by reducing the gross-up to 15%
(from 18%) and dividend tax credit to 9.03% (from 11%) over a four year period to coincide with the decrease in
the small business corporate tax rate. Beginning in 2016, the top federal marginal tax rate on non-eligible
dividends paid will be 21.62% (from 22.22%). This will increase each year to 22.97% in 2019.
Tax Free Savings Account (TFSA) Contribution Limit
Effective for 2015 and subsequent taxation years, the annual contribution limit will increase to $10,000 (from
$5,500). The annual limit will not be indexed to inflation.
Registered Retirement Income Fund (RRIF) Withdrawals
Effective for 2015 and subsequent taxation years, the budget reduces the minimum amount that must be
withdrawn each year by individuals 71 years of age and older. If a RRIF holder withdraws more than the reduced
2015 minimum amount in 2015 they can re-contribute the excess to their RRIFs until Feb 29, 2016.
Lifetime Capital Gains Exemption (CGE) – Qualified Farm or Fishing Property
Effective for dispositions on or after April 21, 2015, the budget increases the CGE to $1 million on capital gains
realized by an individual on the disposition of qualified farm or fishing property.
New Home Accessibility Tax Credit
The budget proposes a new 15% non-refundable tax credit for seniors and persons with disabilities to assist with
the cost of home improvements for safety, accessibility and functionality of a dwelling. Effective for expenditures
373 Commissioners Road West, London, ON, N6J 1Y4
20 Bay Street – Suite 1100, Toronto, ON, M5J 2N8
t: 1.800.668.2167 f: 519.645.1646
www.davismartindale.com
An independent member firm of
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on or after January 1, 2016, the tax credit would be available for up to $10,000 of eligible home renovation
expenditures per calendar year.
Tax Measures for Families
The budget indicates that the family tax cuts announced October 30, 2014 will be implemented in 2015 including:
 Increase in child care expense deduction dollar limits by $1,000 per child, starting in 2015.
 Repealing of child tax credit in 2015.
 Increase in Universal Child Care Benefit to $160 per month (from $100 per month) for each child under six and
introduction of new benefit of $60 per month for children aged 6 to 17, starting January 2015 (reflect in
monthly payments starting July 2015).
 Family Tax Cut tax credit – non-refundable tax credit for couples with children under 18. The credit is meant to
reflect tax saved, up to a maximum of $2,000, on notional “income splitting” of up to $50,000.
 Fitness Tax Credit – Limit increased to $1,000 (from $500).
Other Tax Changes
Regulation 102 Withholding Tax Changes
Non-resident employers sending employees to work in Canada for short periods of time currently have to withhold
tax regardless of whether the employee may be exempt from Canadian tax under a tax treaty. The budget
proposes to eliminate the withholding tax requirement for payments made after 2015, where the employee meets
the exemption criteria under a tax treaty and is not in Canada for 90 days or more in any 12-month period.
Expansion of Information Exchange Agreements with Foreign Tax Authorities
In February 2012, G-20 finance ministers committed to work towards establishing a new standard for the
automatic exchange of tax information in respect of the financial accounts in their jurisdiction.
Under the new system, foreign tax authorities will provide the CRA with information relating to financial accounts
in their jurisdiction. The CRA will, in exchange, provide information to the foreign tax authorities on accounts held
in Canada by residents of the foreign jurisdiction.
Canada has proposed that they will implement the system starting on July 1, 2017 with the first exchange of
information occurring in 2018.
Donations of Private Corporation Shares and Real Estate
The budget proposes an exemption from capital gains tax for donations in respect of dispositions after 2016 of
certain shares of private corporations and real estate.
Changes to Form T1135
Currently, a Canadian-resident individual, corporation or trust, that, at any time during a year, owns specified
foreign property costing in total more than $100,000 must file a Foreign Income Verification Statements (T1135)
with CRA. The budget proposes to ease some of this administrative burden by introducing a more streamlined
form for taxpayers with foreign property up to $250,000. The new form (to be developed) will be effective for
taxation years after 2014.
The information provided in this publication is intended for general purposes only. Care has been taken to ensure the information herein is
accurate; however, no representation is made as to the accuracy thereof. The information should not be relied upon to replace specific
professional advice.
373 Commissioners Road West, London, ON, N6J 1Y4
20 Bay Street – Suite 1100, Toronto, ON, M5J 2N8
t: 1.800.668.2167 f: 519.645.1646
www.davismartindale.com
An independent member firm of
DFK Canada & International