Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

December 2, 2020
2020-6524

Canadian Government presents Federal Fall Economic Statement 2020

Our strategy is clear: We will do whatever it takes to help Canadians through this crisis. We will invest in every necessary public health measure. We will support Canadians and Canadian businesses, in a deliberate, prudent and thoughtful way. And we will ensure the Canadian economy that emerges from this pandemic is more robust, inclusive and sustainable than the one that preceded it, with a stronger, more resilient middle class.”

Deputy Prime Minister and Finance Minister Chrystia Freeland

2020 Fall Economic Statement

On 30 November 2020, Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland tabled Supporting Canadians and Fighting COVID-19: Fall Economic Statement 2020. The Fall Economic Statement (FES) contains several tax measures affecting individuals and corporations. As set out in Table A, the Minister anticipates a deficit of CA$381.6b1 for 2020–21 and projects deficits for each of the next five years.

Table A: Projections of federal budgetary deficit

Changes to the Fiscal Outlook since the 2019 Economic and Fiscal Update (EFU 2019):

 

2019–20

2020–21

$b

$b

   

Economic and Fiscal Snapshot (EFS) 2020 budgetary balance2

(34.4)

(343.2)

Economic and fiscal developments since EFU 2019

(5.9)

14.2

Re-estimates of COVID measures included in EFS 2020

0.9

27.0

Revised budgetary balance before policy actions and investments

(39.4)

(302.0)

Policy actions since EFS 2020

—

(54.5)

Investments in the FES 2020

—

(25.1)

Final budgetary balance (i.e., deficit)

(39.4)

(381.6)

Budgetary balance before planned stimulus (percent of GDP)

(1.7%)

(17.5%)

Federal debt before planned stimulus (percent of GDP)

31.2%

50.7%

Note: Numbers may not add due to rounding.

Several income tax measures, and the accompanying legislative amendments, are proposed in the FES, including measures with respect to:

  • Amendments to the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy (including the related lockdown support)
  • Employee stock options
  • The Canada Child Benefit
  • Registered disability savings plans
  • Patronage dividends paid in shares in respect of agricultural cooperatives

Also, several sales tax measures, and the accompanying legislative amendments, are proposed in the FES, including measures with respect to:

  • Goods and Services Tax/Harmonized Sales Tax (GST/HST) application in relation to e-commerce supplies
  • GST/HST on cross-border digital products and services
  • GST/HST on goods supplied through fulfilment warehouses
  • GST/HST on platform-based short-term accommodations
  • GST/HST relief on face masks and face shields

The Government also outlined other measures to improve tax fairness and strengthen compliance by:

  • Introducing a domestic unilateral tax on corporations providing digital services, which would apply from 1 January 2022, until a coordinated multilateral approach (developed by international partners and led by the Organisation for Economic Co-operation and Development) is introduced
  • Targeting the unproductive use of Canadian housing by foreign nonresident owners
  • Funding new initiatives and extending existing programs targeting international tax evasion
  • Initiating consultations to modernize Canada’s anti-avoidance rules
  • Simplifying the home office expense deduction

Additional information and insight with respect to these proposals will be discussed shortly in greater detail in upcoming EY Global Tax Alerts.

For more information on these measures, see Supporting Canadians and Fighting COVID-19.

Endnotes

1. Currency references in this Alert are to the CA$.

2. The EFS was delivered on 8 July 2020. See EY Global Tax Alert, Canada: Federal Government delivers its 2020 Economic and Fiscal Snapshot, dated 9 July 2020.

_____________________________________________________________________________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), Toronto
Ernst & Young LLP (Canada), Montréal
Ernst & Young LLP (Canada), Calgary
Ernst & Young LLP (Canada), Vancouver
Ernst & Young LLP (United States), Canadian Tax Desk, New York

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more