2011 Federal Budget In Common English-Part 2
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Ian Quigley is the Senior Consultant at the innovative financial advice firm, Qube Consulting
2011 Federal Budget In Common English Part: 2
- The Finance Minister described the budget as “the next phase of Canada’s economic action plan”.
- In plain language the budget is a status quo plan. A plan that does not propose any new taxes for individuals nor a repeal of previously announced tax reductions.
- It is noteworthy that the government also announced a comprehensive review of government spending programs aimed at increasing efficiency and effectiveness. In Canadian history this kind of talk is traditionally bad news for civil servants.
- A key aspect of the budget is an aggressive movement towards technical changes intended to eliminate tax loopholes.
Bonus Item 1: Children’s Art Tax Credit
This budget brings in a 15% non-refundable credit based on an amount of up to $500 of eligible expenses per child paid in a year. This credit applies to expenses on artistic, cultural, recreational or developmental activities. The credit can be used for a child under age 16 at the beginning of the year and attending an eligible program. These programs would be weekly, lasting a minimum of 8 weeks, or in the case of a children’s camp lasting at least 5 days.
Bonus Item 2: Volunteer Firefighters Tax Credit
This budget also brings in a 15% non-refundable credit based on a flat amount of $3000. A firefighter needs to volunteer no less than 200 hours and receive written certification from the chief in the event CRA requests it.
Bonus Item 3: Family Caregiver Tax Credit
Starting in 2012, a 15% non-refundable credit based on a flat amount of $2000 is available to caregivers of dependents with mental or physical infirmity.
Bonus Item 4: Medical Expense Tax Credit for Other Dependents
Taxpayers under current rules can claim the Medical Expense Tax Credit for themselves, their spouses or common-law partners or their children under age 18. Caregivers can also claim this credit for a dependent relative if the caregiver pays the medical expenses. The budget removes a $10,000 cap on these expenses going forward.
Bonus Item 5: Tuition Tax Credit – Examination Fees
The amounts eligible for the Tuition Tax Credit will now include fees paid to an educational institution, professional association or provincial ministry to take an examination that is required to obtain professional status or to be licensed or certified in order to practice a profession or trade in Canada. The total fee, including eligible ancillary amounts, must exceed $100.
Bonus Item 6: RESP Programs
In prior budgets, CRA introduced what are now called family RESP programs. In these programs beneficiaries can share pooled funds used for educational purposes. The original programs segregated beneficiaries in separate programs. This budget offers the sharing opportunity between siblings on family plans even if the programs were arranged as separate programs.
Bonus Item 7: Low Income Seniors
This budget offers $600 for single seniors and $840 for couples as a supplement to GIS and OAS benefits for those that earn less than $2000/annum (single) or $4000/annum (couples). For those above these income levels, the benefit phases out completely at an income of $4400 (single) and $7360 (couples).
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