Now that the Conservatives have won a majority government, we are likely to see the latest Budget pass into law.  Here is a quick recap of the Federal Budget highlights announced last March:

  • Guaranteed Income Supplement for low income seniors will be topped up to a maximum of $600 per year for single seniors and up to $840 per year for couples. This is welcome news for the country’s poorest seniors.
  • Enhancing Student Assistance Programs Budget 2011 will expand eligibility for Canada student loans and grants for both full- and part-time post-secondary students. For instance, part-time students with high family incomes will now be eligible for a Canada Student Loan.
  • There’s also a minor change to Registered Education Savings Plans. The budget proposes to allow transfers between individual RESPs for siblings, without triggering tax penalties or repayments of Canada Education Savings Grants.
  • Children’s Art Tax Credit Ottawa is introducing a new credit for children of up to $500 of eligible expenses for programs associated with artistic, cultural recreational and developmental activities. This is in addition to the fitness credit.
  • Support for Small Business The Hiring Credit for Small Business will provide a one year EI break for about 525,000 small businesses. “The measure will reduce payroll costs for new jobs and encourage hiring,” Flaherty said in his budget speech.
  • Unfortunately, we did not get what we were hoping for. There is “no extra contribution room, no changes in age limits, no cuts to personal or corporate tax rates,” Heather O’Hagan, tax partner with KPMG.
  • No change to the RRIF minimums either. Rather than lower that rate in accordance to extended longevity and smaller annual investment returns, Budget 2011 targets business owners by introducing a similar taxable withdrawal requirement for Individual Pension Plans (IPPs). These are Defined Benefit pensions individuals, couples or small groups. IPP holders will first have to tap existing RRSPs and RRSP contribution room before funding an IPP with past service contributions Ottawa is introducing RRSP “anti-avoidance” rules that parallel earlier crackdowns on the Tax Free Savings Accounts introduced in 2009.
  • The budget hopes to save half a billion dollars over the next five years in a crackdown on perceived abuses of both RRSP and RRIFs “swaps”, “draw down”and other shady schemes which promotes withdrawing from RRSP tax free.
  • Another crackdown is aimed at affluent families who use complex accounting structures to move money from corporations to their children largely free of tax. The budget says the tax on split income – also known as the “kiddie tax” — will be “extended to schemes involving capital gains of a minor child on the sale of shares a corporation” to someone who is not dealing at arm’s length with the child.
  • Charitable giving tax incentives are also targeted. In addition to a package of “integrity measures for charities” that aims to combat fraud and abuse of charitable donation tax incentives, Ottawa is halting a double-dipping practice involving donations of flow-through shares for taxpayers who already enjoy generous resource exploration tax benefits.
  • Extending a retrofit program that encourages homeowners to make their homes more energy efficient.
  • Encouraging health care workers to locate in remote communities by forgiving up to $40,000 in student loans for doctors and up to $20,000 in student loans for nurses.
  • A new Family Care Giver tax credit of up to $2,000 will be introduced to lift some of the burden on people caring for family members at home.