• RCC wins fight to maintain de minimis at current level.
  • Government recognizes retailers’ concerns regarding lengthening of parental leave.

The following provides a summary of key budget measures that affect RCC members.

De Minimis

Notwithstanding an aggressive lobbying effort by foreign online sellers and courier companies, the government has maintained tax fairness on retail purchases, whether made from retailers here in Canada or from online vendors outside our borders.

The current de minimis rule exempts imported parcels with a value under $20 from sales taxes and customs duties. Foreign online vendors have been pressing the Canadian government to increase that level to as high as $200 in this year’s budget. Had that lobbying effort succeeded, the tax-included price on every item under $200 sold by a merchant in Canada would have been significantly more expensive than the comparable item shipped from a foreign source.

The government’s approach is in keeping with policy moves elsewhere in the World. This year, Australia will lower its de minimis rate to $0 and the European Commission recently proposed a €0 de minimis level throughout the EU. Even in online market leader Amazon’s U.S. home, 39 states[i] now have regimes in place to collect state and local taxes on interstate shipments, levelling the playing field with local businesses.

EI Parental Benefits

As promised in the Liberal 2015 Campaign Platform, parents will have the option of taking up to 18 months of EI parental benefits. If they elect to take 18 months, however, the 12 months of EI benefits would have to be spread over the extended period. The government has backed off its earlier proposal to allow parents to take parental leave intermittently, which was RCC’s key concern with the original platform proposal and on which we engaged extensively with government during its consultations.

New parents must determine how they will manage their leave prior to taking leave and once determined this decision will not be permitted to change.

Employer Provided Transit Passes

The government is eliminating the Public Transit Tax Credit, as of July 1, 2017 due to concerns that it has proved ineffective in encouraging incremental use of public transit.

Excise Taxes

There are relatively small increases on excise taxes on tobacco and alcohol: alcohol excise duties will increase by 2% as of March 23, 2017 and will be increased in line with the Consumer Price Index on April 1st each year, starting in 2018. The increase on tobacco of 53 cents per carton of 200 is ostensibly a replacement for the elimination of the manufacturer’s surtax on tobacco products.

Budget 2017 also commits funding to a number of initiatives that impact retailers, in particular:

  • Work to harmonize regulations between Canadian and the U.S. related to product safety and standards continues to be supported through a $6 million investment over the next 3 years. This will provide opportunities to address long-standing irritants that restrict product availability and increase costs.
  • An investment of $149.3 million related to the Safe Foods for Canadians Act and Regulations which will continue to fund improvements in food safety and inspections.
  • The agri-food sector has been identified as one of 6 industries that will be the focus of the government’s innovation strategy.
  • From 2017 onward, T4 slips may be issued electronically, without requiring express consent from employees. This measure, championed by the Canadian Payroll Association, and actively supported by RCC, will save on processing and mailing costs.

A series of measures that increase spending on public transit, rural infrastructure, greener buildings, affordable housing and child care centres, may be of benefit to the retail industry’s building materials sector.

1Of the 45 states that have state sales taxes.

If you have any questions or concerns, please don’t hesitate to contact: Karl Littler, Vice President, Public Affairs at: [email protected] or 416-467-3783