The House of Commons finance committee is recommending new tax credits, streamlined reporting and a comprehensive review of the Canadian tax system in its pre-budget report to Parliament.
The report tabled Monday outlines the committee’s consultations leading up to the 2019 federal budget, the Liberals’ last before next fall’s federal election.
The Liberal-majority committee’s 99 recommendations covered all aspects of the economy, including a number of tax measures.
The federal government should consider making the Family Caregiver Tax Credit refundable, and allow chiropractors to issue the Disability Tax Credit Certificate, the committee said.
It also recommended a federal tax credit for investments in technologies that reduce carbon emissions and improve energy performance in buildings. The government should expand building retrofit efforts and create an energy retrofit tax credit for homes, it said.
The committee joined a growing chorus of think tanks and other organizations—including its counterpart in the Senate—calling for a review of the Canadian tax system.
The government should “appoint an expert panel to undertake a comprehensive review of the Canadian tax system through a ‘made-in-Canada approach’ ensuring a tax system that strengthens the competitiveness of Canadian businesses, drives innovation, and reduces the administrative and compliance burden for all users of the tax system,” the report said.
Additionally, the committee called for annual reviews of the tax system “to streamline tax compliance reporting for small businesses.” Small business owners and other groups have opposed the federal Liberals’ changes to passive income and income splitting rules for private corporations, partly on the grounds of the additional compliance burden.
The CRA should get new powers under the Income Tax Act to compel disclosure of information to address “abusive tax avoidance,” the report said.
On the innovation front, the committee recommended intellectual property (IP) incentives including a “commercialization coupon” for researchers receiving federal grants and an “innovation box tax incentive” for business revenue from commercialization of IP rights issued in Canada.
On the overall economy, the committee said that while Canada is performing well, a number of uncertainties will come into play in developing the 2019 budget.
“A great deal has changed since the Committee undertook its last pre-budget consultations in advance of the 2018 federal budget,” the report said. “In particular, disruptions to global trade, significant changes in the United States’ federal tax and regulatory regime, and a new United States-Mexico-Canada Agreement weigh heavily on the Committees’ considerations.”
Read the full report here.