On March 22, 2017, Minister of Finance Bill Morneau tabled the 2017 Federal Budget entitled “Building a Strong Middle Class” (the “Budget”). As is often the case, there was much speculation regarding the Budget, both with respect to how the Liberal Government might react to predictions about lower tax rates in the United States and specifically concerning the taxation of capital gains.

As it turned out, the Budget did not introduce any major changes to our tax system, did not affect the taxation of capital gains, nor did it modify income tax rates. The Budget does, however, describe a further study that is underway to “ensure a fair and efficient tax system” by examining the use of private corporations as a planning tool, particularly for income splitting, earning investment income and converting investment income into capital gains.

From a fiscal perspective, the Budget projects the 2017 deficit to be $27.8 Billion (slightly larger than was forecasted in the Fall), the 2018 deficit to be $25.9 Billion to be followed by additional significant deficits through 2021.