March 4, 2010 / 9:12 PM / 9 years ago

Canada keeps corporate tax cuts in place, targets

 * Still aims for 15 pct tax rate by 2012
 * Closes loopholes including tax credit for plastic surgery
 By Jeffrey Hodgson
 OTTAWA, March 4 (Reuters) - Canada will push ahead with
plans to cut its corporate tax rate to 15 percent by 2012, but
will crack down on tax evasion and scrap loopholes that include
a tax credit for cosmetic surgery.
 The changes, part of the 2010 federal budget introduced on
Thursday, will lower the federal general corporate tax rate from
18 percent to 16.5 percent next year. The government said that
by 2012, Canada will have the lowest statutory corporate income
tax rate among the Group of Seven major economies.
 The government will also do more to close tax loopholes,
including introducing new rules for cases where employees
surrender stock options back to their companies in exchange for
cash or other benefits. It said this had sometimes let
stock-based employment benefits escape personal and corporate
taxation.
 "These loopholes allow a few businesses and individuals to
take advantage of hard-working Canadian who pay their fair
share," Finance Minister Jim Flaherty said.
 Canada will also tighten up eligibility for tax credits on
medical costs, eliminating credits for cosmetic surgery unless
it's required for medical or reconstructive reasons.
 The government said it will strengthen the capacity of the
Canadian Revenue Agency to deal with "aggressive tax planning"
and fight tax evasion.
 It said it will ensure that criminal code provisions that
apply to serious crimes related to money laundering and
terrorist financing can be invoked in tax evasion cases.
 The budget also included C$3.2 billion ($3.1 billion) in
personal income tax relief, which is part of the C$19 billion
the government will provide this year in the second leg of its
economic stimulus plan. The plan will include an enhanced
"Working Income Tax Benefit," along with higher child benefits
for parents and lower taxes for some seniors.
 ($1=$1.03 Canadian)
 (Editing by Janet Guttsman)

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