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New Canadian Tax Measures Information

  • Date: 2012/05/07 (Rev: 2016/03/24) Nair & Co.
  • Synopsis : Details of new tax measures including an expanded list of medical devices and prescription drugs free from Goods and Services Tax and Harmonized Sales Tax.

Main Document

Canada Releases Details of New Tax Measures - The Canadian Finance Minister announced details of the new tax measures which include an expanded list of medical devices and prescription drugs that are free from Goods and Services Tax/ Harmonized Sales Tax.

The Economic Action Plan 2012 also details penalties for falsified registration of charitable tax shelters as well as authorizes the Canada Revenue Agency to issue demands for filing returns either through an online notice or by mail.

The details of the new and previously announced tax measures are as follows:

  • Medical and assistive devices - Expanded list of Goods and Services Tax (GST)/Harmonized Sales Tax (HST) zero-rated medical and assistive devices.
  • Prescription drugs - Expanded list of GST/HST zero-rated non-prescription drugs that are used to treat life-threatening diseases.
  • Pharmacy Services - Professional services rendered by certain pharmacists have been exempted from GST/HST, but do not include prescription drug dispensing services that are already zero-rated under the GST/HST.
  • Medical Expense Tax Credit - the list of eligible expenses under the Medical Expense Tax Credit has been expanded.
  • Certain literacy organizations - can claim a rebate of the GST and a part of the HST for books that are distributed for free.
  • Registered Disability Savings Plan - certain family members are allowed to temporarily open a Registered Disability Savings Plan for an adult individual who may not be in a position to sign a contract.

Enhancing Accountability for Charitable Donation Tax Shelters:

  • New penalty for organizations which provide false information while registering and for failing to register a tax shelter before selling interests related to it.
  • Penalty for organizations which do not file an information return or those who provide false or misleading sales information.
  • The validity period for the tax shelter identification number has been limited to one calendar year.
  • Gifts made by a charity to promote political activities of certain candidates to be accounted for as expenditure by the charity on political activities.
  • The Minister of National Revenue has been authorized to suspend the tax-receipting privileges of a registered charity or a registered Canadian amateur athletic association, if the charity or association fails to file information return requirements or uses resources towards political activities in excess of the limits stipulated in the Income Tax Act.

Measures Related to Improving Business Investment in Canada:

  • The temporary Mineral Exploration Tax Credit for flow-through share investors has been extended by a year.
  • Corporations will be given room for delay and split eligible dividend designations.
  • A designated partner in a partnership will be allowed to issue a waiver on behalf of all partners to extend the time limit for issuing a determination related to the partnership.
  • The values of duty and tax-free goods imported by Canadian residents returning after 24-hour and 48-hour absences may be increased to $200 and $800, respectively.
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