The Minister of Finance, Jim Flaherty, has tabled a detailed Notice of Ways and Means Motion to implement income tax reforms.  The majority of the measures were related to corporate tax, and include an overhaul of the Scientific Research and Experimental Development (SR&ED) program.  The corporate tax reforms that were tabled are outlined below:

  • Expansion of the eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of bioenergy equipment.
  • Phase-out of the Corporate Mineral Exploration and Development Tax Credit.
  • Phase-out of the Atlantic investment tax credit for activities related to the oil & gas and mining sectors.
  • Provision that qualified property for the purposes of the Atlantic investment tax credit will include certain electricity generation equipment and clean energy generation equipment used primarily in an eligible activity.
  • Reduction of the general Scientific Research and Experimental Development (SR&ED) investment tax credit rate to 15 per cent from 20 per cent. Reduction of the prescribed proxy amount, which taxpayers use to claim SR&ED overhead expenditures, from 65 per cent to 55 per cent of the salaries and wages of employees who are engaged in SR&ED activities.
  • Removal of the profit element from arm’s length third-party contracts for the purpose of the calculation of SR&ED tax credits.
  • Removal of capital from the base of eligible expenditures for the purpose of the calculation of SR&ED tax incentives.
  • Elimination of corporate income tax avoidance through the use of partnerships to convert income gains into capital gains.