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The Trudeau government is dedicating about a third of the windfall it’s expecting from the surprisingly strong economy toward investments, tax relief and new spending on social programs to support children and the working poor.

Finance Minister Bill Morneau released a fall economic statement Tuesday that promises nearly $15 billion in fresh spending over the next five years — on top of what it had outlined in its March budget.

The government focused on four major spending measures in the update:

  • indexing the Canada child benefit (CCB) to cost-of-living increases,
  • expanding the working income tax benefit (WITB) program,
  • formalizing a promised cut to the small business tax rate and
  • ongoing work to overhaul the tax code.

Morneau announced the government will introduce an enhancement to CCB payments so they start rising with the cost of living two years earlier than initially promised — at a cost to government of $5.6 billion over five years.

He will also bolster the WITB, a refundable credit aimed at providing relief for low-income Canadians who have jobs and encouraging those who don’t to join the workforce. The measure is projected to lower government revenues by $2.1 billion over five years, starting in 2018.

Measures to lower the small business tax rate to 10% next year and 9% in 2019, along with ongoing overhauls to the tax code, will cost the government $1.3 billion between 2017 and 2022, but that doesn’t take into account one of the major changes coming to tax rules on how passive investments are handled.

Read: Tax proposal summary: what’s in, what’s out

Tax proposals for small business

The government says in the report that revised draft legislative proposals for income sprinkling by private corporations will be released “later this fall.”

Specifically, the government says it will introduce reasonable tests for family members aged 18 to 24, as well as for those 25 and older, for income sprinkling.

And, as announced on May 5, 2017, the government says it will also bring forward legislative proposals to ensure farmers and fishers aren’t inappropriately denied the small business deduction on income from sales to a co-operative.

Spending follows strong economy

The spending measures announced today take advantage of this year’s unexpectedly robust economic performance, which is projected to provide an additional $47 billion for the government’s bottom line over the same five-year period.

The remaining portion will be aimed at reducing annual deficits, which are projected to shrink each year starting in 2018-19.

The government, however, did not map out a timeline to balance the federal books, even though it had promised in its 2015 election platform to do so by 2019.

Read the full fall economic statement.

Also read:

Paying tax could lead to more money for disabled children

Health groups accuse Liberals of diabetes tax grab

Originally published on Advisor.ca
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