Volunteer Firefighters and Search and Rescue Volunteers Tax Credit Enhancement
The proposed measure increases the tax credit for volunteer firefighters and search and rescue volunteers to $10,000 from $3,000 for individuals that have completed 200 hours of volunteer service in a calendar year. The measure applies to the 2022 and subsequent taxation years.
The PBO estimates that the proposed measure will generate a 5-year cost of $171 million.
The proposed measure increases the tax credit for volunteer firefighters and search and rescue volunteers to $10,000 from $3,000 for individuals that have completed 200 hours of volunteer service in a calendar year.
The measure applies to the 2022 and subsequent taxation years.
- The cost for the 2021-2022 fiscal year represents the first 3 months of 2022.
- Estimates are presented on an accruals basis as would appear in the budget and public accounts.
- Positive numbers subtract from the budgetary balance, negative numbers contribute to the budget balance.
- Totals may not add due to rounding.
The cost of volunteer firefighters and search and rescue volunteers tax credit enhancement was defined as the loss in income tax payable to the government and was estimated using the Social Policy Simulation Model (SPSD/M) from 2022 to 2026.[^1]
The SPSD/M model does not include the search and rescue volunteers tax credit, as such the estimated group of beneficiaries is smaller than anticipated. To account for the gap, the cost was corrected by applying an adjustment coefficient based on the ratio of the PBO’s projections of the number of beneficiaries (that is, volunteer firefighters and search and rescue volunteers, and the SPSD/M’s projections).
The PBO’s projections were based on historical data of the beneficiaries of the tax credit from the T1 Final Statistics reports, the number of beneficiaries in the Report of Tax Expenditure 2021, historical labour force growth rate and the projected labour force growth rate as of 2021, reference scenario by Statistics Canada.
A behavioural response was not assessed. The proposed measure is not expected to increase recruitment nor deter participation in volunteer firefighter or search and rescue activities. It is also not predicted to generate switching costs stemming from future claimants of the tax-exempt income for emergency services volunteers.[^2]
Unforeseen changes to demographics, as well as the use of statistical methods for projections, imply that all growth rates and adjustments applied have inherent uncertainty.