Fall Federal Budget: Will Spending Be Cut?

Canada has historically presented an annual budget since Confederation in 1867, even through periods like World Wars and the Great Depression, but we have recently experienced the longest period without a full federal budget in our history. By the time the next one is brought down, expected in October 2025, it will have been 18 months since the controversial April 2024 budget which introduced the doomed capital gains inclusion rate hikes. What can we expect?

Review additional tax provisions announced by the Government in the 2017 Federal Budget.

Knowledge Bureau will publish a late edition of KBR on March 22 to cover the Budget. Be sure to join us for all the news and please share knowledge: a subscription to the Special Budget Report is free. Your friends and colleagues can sign in to reserve their copy now.

The full OAS  Benefits to be reported as income by recipients on the 2016 tax return is $6,878.82.  The amount will be less if you started receiving the benefits this year or could be more if you delayed starting beyond your 65th birthday.  But, if you had unanticipated higher income on the 2016 tax return perhaps due to your investments, your annual Old Age Security (OAS) could be reduced or disappear entirely come this July.  Worse, you could find yourself paying more in quarterly tax instalment remittances.  Are you having that discussion with your tax specialist?  It’s important to plan your summer cash flows.  Here’s what you need to know:

Lost your job?  That can be a very traumatic experience for some; a relief for others.  In both cases, Employment Insurance (EI) benefits are a good first line of defence to pay for food and shelter.  However, these benefits will be taxable. Worse,  if you are a high-income earner in the year you leave your job, these benefits may also be subject to repayment.  Therefore, some tax planning is in order.

CRA has been busy announcing new convictions at the start of 2017, a great deterrent for potential tax evaders at the start of tax season.  It’s always best to come forward to declare shortfalls in income reporting or overstatements of tax deductions or credits to avoid expensive interest, penalties and potential jail time. Here’s what happened to those who didn’t. . .

What’s the best way to pay the least amount of tax on your RRSP or RRIF accumulations?  “Average down” the taxes payable on your accumulated capital  by using the progressivity of the tax system (the more you make the more you pay) and the current tax brackets and rates to your advantage.