This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Increased Income Taxes Disappoint Credit Unions

TORONTO, March 21, 2013 /CNW/ - Canada's credit unions were disappointed to see that today's federal budget increases taxes for credit unions and caisses populaires in 2013 and in future years.  A tax provision designed to help credit unions compete with big banks will be eliminated.

"We were surprised that Budget 2013 targets credit unions in this way," said Gary Rogers, Vice President, Financial Policy with Credit Union Central of Canada.  "The Income Tax Act is no stranger to a myriad of tax incentives and credits, including many introduced by the current government.  In the absence of a comprehensive review and widespread reduction of tax expenditures, it is curious that one specific to credit unions has been terminated."

Credit unions first became taxable in 1971.  Tax rules implemented at that time recognized that credit unions are unlike their competitors.  They are "the small business of financial institutions".  Credit unions do not have access to capital markets to issue shares; they incur higher costs to operate in small underserved markets; and they provide social benefits different from big banks, especially in serving small communities across Canada.  Governments have wanted to ensure there was a strong, competitive second tier of financial service providers.  Those reasons continue to be valid today.

The Government of Canada's Annual Tax Expenditures report shows that the cost to the treasury of this tax incentive has been decreasing over a period of years.  In the most recent year, 2012, it was projected to be $47 million.

These changes will be phased in over 5 years. Not all credit unions are impacted equally.  Some have grown their retained earnings beyond the threshold for accessing this tax reduction and will see no change.  Some very small credit unions may continue to access the lower tax rate through the conventional small business tax rate regime.  But most credit unions will experience tax increases.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 17,558.84 +118.25 0.68%
S&P 500 2,081.32 +13.68 0.66%
NASDAQ 5,057.6680 +17.8920 0.36%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs