The Federal Government presented its 2014 Budget, “The Road to Balance: Creating Jobs and Opportunities,” on Tuesday, February 11. The Budget includes in its 419 pages approximately $280 billion in spending over the next several years. The Government won’t raise personal or corporate taxes in 2014 and predicts a $2.9 billion deficit in 2014-15, leading to a surplus of $6.4 billion the following year and $10.3 billion by 2018-19. The final deficit for 2013-14 was $16.6 billion, less than the $17.9 billion estimated in the fall.
The Budget offers no grand statements, but many targeted measures aimed at increasing revenue, preventing tax evasion, reducing the cost of Government, fostering innovation and supporting job creation through infrastructure spending and incentives for business. CPA Canada approves of the Government’s measured efforts to reduce the deficit and balance the country’s books. Gabe Hayos, CPA Canada’s vice-president of taxation, advises that “Spending shouldn’t pick up until it is clear that the budget is balanced and additional money is available.” However, the Government did not propose any significant measures to make the tax system more efficient and reduce the red tape that businesses face.
Nonetheless, the CPA Canada gives the 2014 Budget a “silver medal” for its efforts in this Olympic year, with the hope that the Government will implement comprehensive tax reform when Canada returns to a surplus position. And there is hope. The Budget commits the Canada Revenue Agency to holding nation-wide consultations every two years to gather ideas on improving services and reducing bureaucracy for small businesses. The Canadian Federation of Independent Business was a stricter judge, giving the Budget a bronze.
The Budget may not thrill Canada’s business community-and some will likely not notice much change at all this year-but many organizations will enjoy benefits. On the other hand, some businesses and non-profits will want to take a look at their governance and accounting practices in order to keep the tax man from knocking on their doors.
Jeff Nightingale is the Co-Managing Partner and Senior Tax Partner at Lipton LLP, Chartered Accountants. Jeff has written a number of publications and speaks to a variety of professional and business groups, including the Canadian Tax Foundation, the Institute of Chartered Accountants of Ontario and The Law Scociety of Upper Canada. He has also completed the CICA In-Depth Tax Course as well as other advanced taxation courses and is a member of the Canadian Tax Foundation and the Society of Trust and Estate Practitioners.