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Budget measures of note

Published by Frank Defalco on February 11, 2014

The federal Minister of Finance has introduced the 2014-15 Budget today in the House of Commons. As expected, this year’s budget does not contain too many new major initiatives, in the aim of balancing the federal budget by 2015.

There are still however some measures of interest, and which respond to some of CME’s concerns and recommendations.

Accelerated Capital Cost Allowance (ACCA)

As you know, the temporary two-year Accelerated Capital Cost Allowance for machinery and equipment (ACCA) will end in 2015. While the budget does not mention anything related to ACCA, it states that Investment by manufacturers in machinery and equipment has been particularly strong, outpacing that in the United States over the recovery, after lagging in prior years. Modern and up-to-date capital equipment increases the productivity and competitiveness of Canadian companies, which enables them to create jobs and raise living standards.

We will continue to work with Finance in the next year to make sure that Canada’s capital cost allowance regime for machinery and equipment remains competitive and continues to help manufacturers gain productivity.

The Budget also announced a public consultation in 2014 on a measure that would simplify tax compliance for more than 60,000 businesses by replacing the complex eligible capital property rules for intangible assets (such as Intellectual properties and patents) with a new class of depreciable property.

Employee Training measures through the Canada Job Grant

The Government reiterated its commitment to align training with labour market needs through the Canada Job Grant. The program will be launched in 2014, businesses with a plan to train unemployed and underemployed Canadians for a new or a better job will be eligible to apply for the program. The program could provide up to $15,000 per person for training costs, including tuition and training materials, which includes up to $10,000 in federal contributions. Employers would be required to contribute on average one-third of the total costs of training.  The Grant will be for short-duration training provided by an eligible third-party trainer, such as community colleges, career colleges, trade union centres and private trainers. Training can be provided in a classroom, on site at a workplace or online.

Regulatory Cooperation Council Action Plan

As requested by CME, Economic Action Plan 2014 will introduce amendments to the Hazardous Products Act and other consequential amendments to align and synchronize implementation of common classification and labelling requirements for workplace hazardous chemicals. This measure will facilitate international trade, reduce costs to businesses and consumers and enhance worker health and safety through improved and consistent hazard identification, which will provide a net benefit for Canadians of nearly $400 million in increased productivity and decreased health and safety costs.

Refocusing regional economic development agencies supporting business R&D

In its 2014 pre-budget submission, CME recommended that advanced manufacturing funds be implemented in all regional economic development agencies across the country, similar to the Advanced Manufacturing Fund recently implemented in Southern Ontario. We are pleased to see some steps in the right direction in the budget. Economic Action Plan 2014 announces the Government’s intention to refocus its Atlantic Canada-based innovation programs to ensure that they are responsive to the needs of business, including small and medium-sized enterprises, and that they effectively support the development and commercialization of new ideas, technologies, products and services that lead to strong economic growth.

New investments in automotive Innovation

In addition the government committed to invest an additional $500 million into the Automotive Innovation Fund, to support significant new strategic research and development projects and long-term investments in the Canadian automotive sector.

Windsor-Detroit International Crossing

CME has been one of the strongest advocates for the building of a new bridge between Windsor and Detroit. The Windsor-Detroit trade corridor is the most important international land crossing in North America, handling 30 per cent of Canada-US trade. In 2012, approximately 2.5 million trucks carrying over $100 billion in trade used this corridor.

Strengthening Canada’s intellectual property regime

As previously announced, the government proposes to modernize Canada’s intellectual property framework to better align it with international practices. CME will continue to push for a stronger IP protection regime for Canadian manufacturers enhancing consumer awareness of Canadian-Made products.

Economic Action Plan 2014 announces that a private sector steering committee will be established to lead the development of a “Made-in-Canada” consumer awareness campaign. A private sector steering committee will be established to lead this initiative. Additional details will be announced in the coming months.

Reducing Barriers to Internal Trade

CME has been a strong supporter of having the federal and the provinces renew the agreement on internal trade and facilitate trade between provinces.  We are glad to see the federal government reiterate its leadership into this process, including a commitment to take action within its jurisdiction to strengthen internal trade by introducing further amendments to the Importation of Intoxicating Liquors Act to allow Canadians to take beer and spirits, in addition to wine, across provincial boundaries for their personal use.

Supporting Mining, Forestry and Agriculture

-        Supporting mineral exploration by junior companies by extending the 15-per-cent Mineral Exploration Tax Credit for flow-through share investors for an additional year.

-        $90.4 million over four years to continue to support the Investments in Forest Industry Transformation program.

Investing in Infrastructure and Transportation

-        $165 million over two years on a cash basis to advance the construction of a new bridge for the St. Lawrence.

-        $378 million over two years on a cash basis to advance the repair and maintenance of federal bridges in the Greater Montreal Area, including the Champlain Bridge to ensure it is properly maintained until the new bridge for the St. Lawrence opens.

-        $6 billion in federal support to provinces, territories and municipalities under current infrastructure programs in 2014–15 and beyond.

Canada-US Price Gap

The Government intends to introduce legislation to address price discrimination that is not justified by higher operating costs in Canada, and to empower the Commissioner of Competition to enforce the new framework. Details will be announced in the coming months.

Upcoming public consultations on corporate tax measures:

Consultation on tax planning of multinational enterprises: The Government will seek input from stakeholders on issues related to international tax planning by MNEs – and on other issues, such as ensuring the effective collection of sales tax on e-commerce sales by foreign-based vendors.

Consultation on Treaty shopping: The Government invites comments from interested parties on a proposed rule to prevent treaty shopping. The rule would use a general approach focussed on avoidance transactions and would contain specific provisions setting out the ambit of its application.

The approach would ensure that treaty benefits are provided with respect to ordinary commercial transactions and that, if the rule applies, the benefit that would be reasonable under the circumstances would be provided. Interested parties are requested to provide comments within 60 days after Budget Day.

Other measures to help employee training

·       $222 million in matching funding for training Canadians with disabilities

·       Expand Canada Student Loans program to cover training costs of apprentices in Red Seal trades

·       $55 million to support student interns in industry

·       New Job Matching website

·       $33 million to implement improvements in temporary foreign worker program and expression of interest system for economic immigrants

Other measures of interest

·       $117 million over two years to Atomic Energy Canada to support Chalk River transition to Government-owned, contractor-operated model for delivery of medical isotopes

·       Creation of an Open Data Institute in Waterloo to support technological applications using Big Data

·       $28 million to National Energy Board to speed up project reviews

·       Support for continued ferry services in Atlantic Canada

·       Legislation to cap roaming wireless rates

·       $305 to expand broadband internet

·       Investments to support food safety regulation

·       Tobacco taxes increased

·       $92 million to strengthen efforts to combat contraband tobacco







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