Since it came into power in 2015, the Liberal government has made a number of changes in the Canadian tax system. A brief description of three of these changes follows.
Reduction To Tax Free Savings Account (TFSA)Contributions Limit - The TFSA provision allows non- deductible contributions to be made to a registered account where earnings accumulate on a tax free basis. Withdrawals from these accounts are not taxed. For 2016 and subsequent years, the maximum annual contribution has been reduced from $10,000 to $5,500.
Small Business Tax Rate - For many years, the federal tax rate on active business income earned by Canadian Controlled Private Corporations was 11 percent, 4 percentage points less than the rate applicable to most other corporate income. In 2015, the Conservative government announced that the rate would gradually be reduced to 9 percent. The rate was reduced to 10.5 percent for 2016 but the further planned reductions were cancelled. However, in 2017, the planned reductions were re -instated, with the rate going to 10 percent for 2018 and 9 percent for 2019.
Early Child Educator School Supply Tax Credit - The government introduced a new tax credit equal to 15 percent of eligible expenditures for supplies (e.g ., paper, glue, paint for art projects, etc.). The maximum base for the credit will be $1,000 of eligible supplies in each year. To qualify, the taxpayer must have a certificate or diploma in early childhood education.
Required: Analyze each of the described changes using two of the qualitative characteristics of tax systems that are listed in your text. For your convenience, the list of qualitative characteristics presented in the text is as follows:
• equity or fairness
• neutrality
• adequacy
• elasticity
• flexibility
• simplicity and ease of compliance
• certainty
• balance between sectors
• international competitiveness

Ms Michelle Walker, a U

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