Canadians companies – Business budget changes
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The Update confirms the Government’s commitment to a 2-percentage-point reduction in the general corporate income tax rate by 2010, and the elimination of the corporate surtax in 2008, as proposed in Budget 2005.
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Budget 2003 announced that the federal capital tax would be eliminated by 2008. The Update proposes to completely eliminate the federal capital tax as of January 1, 2006.
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Extending the carry-forward periods for non-capital losses and investment tax credits to 20 years. The measure is proposed to apply to losses incurred and credits earned in taxation years that end after 2005.
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Budget 2005 announced an acceleration of the capital cost allowance (CCA) rate from 30% to 50% on a full range of renewable energy generation equipment in Class 43.1 and for certain high-efficiency cogeneration equipment acquired before 2012. In order to encourage bioenergy in the pulp and paper sector, the tax plan proposes to expand eligibility for Class 43.1 and the new 50% class to cogeneration systems that use a type of biomass referred to as “black liquor”.
