Federal Budget 2017: Business Income Tax Measures, Part 1

by in Canadian Government News and Updates
Federal Budget 2017:  Business Income Tax Measures, Part 1

Here are the Business Income Tax Measures proposed in the Federal Budget 2017:

·         Investment Fund Mergers - Merger of switch corporations into mutual funds:  Budget 2017 proposes to extend the mutual fund merger rules to facilitate the reorganization of mutual fund corporation that is structured as a switch corporation into mutual fund trusts on a tax-deferred basis.

·         Investment Fund Mergers – Segregated fund mergers:  Budget 2017 proposes to allow insurers to effect tax deferred mergers of segregated funds. 

·         Clean Energy Generation Equipment – Geothermal Energy:  Budget 2017 proposes 3 changes – that eligible geothermal energy equipment under Classes 43.1 and 43.2 be expanded to include geothermal equipment that is used primarily for the purpose of generating heat or a combination of heat and electricity, that geothermal heating be made an eligible thermal energy source for use in a district energy system, and that expenses incurred for the purpose of determining the extent and quality of a geothermal resource and the cost of all geothermal drilling be qualified as a Canadian renewable and conservation expense.

·         Canadian Exploration Expense – Oil and Gas Discovery Wells:  Budget 2017 proposes that expenditures related to drilling or completing a discovery well generally be classified as Canadian Development Expense (CDE) instead of a Canadian Exploration Expense (CEE) to ensure that expenditures more clearly linked to success are deducted gradually over time as development expenses. 

·         Reclassification of Expenses Renounced to Flow-Through Share Investors:  Budget 2017 proposes to no longer permit eligible small oil and gas corporation to treat the first $1 million of CDE as CEE.  This will apply in respect of expenses incurred after 2018.

There are other Business income tax measures proposed in the most recent Federal Budget. We’ll take a look at these on our next blog!


Source:  http://www.budget.gc.ca/2017/docs/tm-mf/si-rs-en.html#_Toc476839175

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