1997 Canadian federal budget
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| Presented | 18 February 1997 |
|---|---|
| Parliament | 35th |
| Party | Liberal |
| Finance minister | Paul Martin |
| Total revenue | 160.864 billion [1] |
| Total expenditures | 157.905 billion [1] |
| Surplus | $2.959 billion[1] |
|
‹ 1996 1998› | |
The Canadian federal budget for fiscal year 1997–98 was presented by Minister of Finance Paul Martin in the House of Commons of Canada on 18 February 1997.[2] It is the last budget of the 35th Canadian Parliament and the last budget before the 1997 Canadian federal election. The budget's unofficial subtitle is Building the Future for Canadians (and for the first time the subtitle is used on the cover page of all budget documents).[3]
Personal income taxes
The budget focused on increased support for education, healthcare and childcare-related expenses.[4]
Tax measures for students
- Indefinite carry-forward for Tuition and Education Tax Credit for all tax credits incurred in 1997 and after;
- Increase in the Education Tax Credit: from $100 annually in 1996 to $150 in 1997 and $200 in 1998 and subsequent years;
- The list of expenses eligible for the tuition tax credit is expanded to include mandatory ancillary fees (except student association fees);
- The first $500 of scholarship or bursary income is exempted from income taxes;
- Registered education savings plan yearly contribution limit to be doubled from $2,000 to $4,000 per beneficiary.
Tax measures for persons with disabilities
- Some new categories expenses incurred by persons with disabilities are made eligible for the medical expense tax credit;
- The $5,000 limit on the attendant care deduction is repealed;
- Disabled persons will be allowed to deduct the entirety of the expenses incurred (and not only the first $5,000) up to 2/3 of their earned income.
Working Income Supplement enhancement
The Working Income Supplement (WIS) is vastly enhanced by the budget:
| Pre-budget[6] | Post-budget Starting July 1, 1997[7] | |
|---|---|---|
| Maximum benefit | $500 $750 starting July 1997 $1,000 starting July 1998 |
$605 for the first child + $405 for the second child + $330 for the third and each subsequent child |
| Phase-in start income level |
$3,750 | |
| Maximum benefit income level |
$10,000–$20,921 | |
| Phase-out start income level |
$20,921 | |
| Phase-out reduction rate |
10% | 12.1% for one-child families 20.2% for two-child families 26.8% otherwise |
| Phase-out complete income level |
$25,921 | |
Corporate income taxes
Some technical changes were made to corporate income taxes, mostly to increase revenues:[8]
- Transfer pricing guidelines were reviewed in line with the principles set out by the OECD;
- The Investment Tax Credit is denied for expenses that have not been reported within 12 months after the filing due date of the year in which the expenses were incurred;
- This change extends to ITC the restriction introduced by the 1994 Canadian federal budget for the deduction of SR&ED expenses.
Other taxes
- The temporary capital tax surcharge on large banks is extended by a year until 31 October 1998.[9]
- The budget also proposes to allow small businesses to remit withholding amounts (income taxes, Employment Insurance premiums and Canada Pension Plan contributions) on a quarterly basis if their average monthly withholding is less than $1,000 and their file presents no compliance irregularities.[10]
Expenditures
Marcel Massé, President of the Treasury Board, tabled the 1997-98 Main Estimates on 20 February 1997, outlining the government's spending plan for the year ending 31 March 1998.[11] The budget planned for a 2.9% decrease in program expenses over 1996-97 with $103.2 billion set aside in the budget and another $2.8 billion to be allocated through a supplementary budget sometime in the year.[12]
Including the $46 billion interest expense on the national debt, the Main Estimates totals $149,555,320,000 in spending for the 1997-98 fiscal year,[11] an $8 billions decline versus the preceding fiscal year.[13]
Several transfers and departments were affected by cuts:[11]
- Department of National Defence faced $638 million in budget cuts, mainly attributable to the cancellation of the EH-101 helicopter project;
- The Canada Health and Social Transfer (CHST) was cut by a further $2.5 billion;
- Equalization payments were cut by a further $504 million.