The individual lifetime capital gains exemption limit of $750,000 will be increased to $800,000 effective for the 2014 taxation year, and will be indexed to inflation for taxation years after 2014.
Dividend Tax Credit
Budget 2013 proposes to reduce the effective rate of the dividend tax credit applicable to non-eligible dividends (i.e., dividends paid out of income that was taxed at a lower rate, generally being the small business income tax rate), such that the effective tax rate applicable to non-eligible dividends will increase. This proposal applies to non-eligible dividends paid after 2013.
Registered Pension Plan Contribution Errors
Budget 2013 proposes to allow administrators of registered pension plans (RPPs) to make a refund to correct a contribution that was made as the result of a reasonable error, without first obtaining approval from the CRA, if the refund is made no later than December 31 of the year following the year in which the inadvertent contribution was made. If an RPP administrator seeks to correct a contribution error after the deadline, the existing procedure of obtaining authorization from the CRA will continue to apply.
This proposal applies to RPP contributions made on or after the later of January 1, 2014, and the day the enacting legislation receives Royal Assent.
Mineral Exploration Tax Credit
Individuals (other than trusts) who invest in flow-through shares may be entitled to additional tax benefits in addition to the renounced exploration expenses available on all flow-through shares. Where certain qualifying expenditures (essentially expenses incurred in mining exploration above or at ground level) are incurred and renounced to a holder of flow-through shares who is an individual (other than a trust), that holder is entitled to an investment tax credit equal to 15% of the renounced qualifying expenditures. This tax credit on “grass-roots” surface exploration expenditures is called the “mineral exploration tax credit.” As has been the case over the last several budgets, Budget 2013 proposes to extend the 15% mineral exploration tax credit for another year.
Labour-Sponsored Venture Capital Corporations Tax Credit
Budget 2013 proposes to phase out the federal Labour-Sponsored Venture Capital Corporations (LSVCC) tax credit by 2017. As of Budget Day, an LSVCC can no longer be federally registered or prescribed for purposes of this credit.
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