May 2025 Poll

Does the Liberal promise expected soon to cut the lowest personal income tax rate by 1% to 14%,  go far enough to help Canadians impacted by high costs?

Here are some important initiatives contained in the June 11, 2011 Federal Budget. These financial measures will have implications for all Canadians so watch for news and developments in the months ahead. PRPPs - In December 2010, Finance Ministers agreed on a framework for defined contribution Pooled Registered Pension Plans (PRPPs) to provide Canadians with a new, low-cost, accessible vehicle to meet their retirement objectives. Federal, provincial and territorial officials are working together to implement PRPPs as soon as possible. On June 15, 2011, the Department of Finance released a consultation document entitled "Tax Rules for Pooled Registered Pension Plans (PRPPs)". Feedback is being sought on these proposed modifications with a deadline of August 12, 2011. Financial advisors will be interested in the details of this document ñ it looks like full speed ahead for PRPPs! RDSP - A review of Registered Disability Education Plans will be conducted in 2011, coinciding with the three-year anniversary of the introduction of RDSPs in 2008.  Bill C-3 amends the Income Tax Act and related legislation to allow beneficiaries of Registered Disability Savings Plans who have shortened life expectancies to withdraw more of their plan savings by permitting annual withdrawals without triggering the 10-year repayment rule, subject to specified limits and certain conditions.  It also amends the Income Tax Act to ensure that individuals have the legal authority in all circumstances to appeal a determination concerning their eligibility for the disability tax credit.  This measure will apply after 2010 to withdrawals made after Royal Assent to the enacting legislation - this occurred on June 26, 2011. However, as a transitional rule, beneficiaries making an election under this measure may utilize their 2011 withdrawal limit in 2012 provided that the required medical certification was obtained before 2012. CPP Enhancement -  Federal, provincial and territorial governments are continuing work on options for a modest enhancement to the CPP. Any changes would require a consensus among governments and reflect the need to protect Canada's economic recovery. Provincial Finance Ministers will discuss options and concerns further at their next meeting.   These meetings occur every June and December, but Minister Flaherty cancelled the June meeting in order to devote time to implementing the Federal Budget.  Junior Finance Minister Ted Menzies will visit all provincial and territorial finance departments this summer instead. ADDITIONAL EDUCATIONAL RESOURCES: Knowledge Bureau Fall Catalogue  

Bill C-3, the Supporting Vulnerable Seniors and Strengthening Canadaís Economy Act received Royal Assent on June 26, 2011.  Several other budget measures will come into effect on July 1, 2011, as a result of legislation contained in Bill C-9. Seniors and members of pension plans will want to take note of these changes. Seniors with modest incomes will be pleased to discover a top-up to GIS and Allowance payments beginning July 1, 2011. According to the June, 2011 Federal Budget Documents, seniors with little or no income other than Old Age Security and the Guaranteed Income Supplement will receive additional annual benefits of up to $600 for single seniors and $840 for couples. Single recipients with an annual income (other than Old Age Security and the Guaranteed Income Supplement) of $2,000 or less, and couples with an annual income of $4,000 or less, will receive the full amount of the benefit. Above these income thresholds, the amount of the top-up will be gradually reduced and will be completely phased out at an income level of $4,400 for singles and $7,360 for couples. Bill C-9 contains changes to the Pension Benefits Standards Act that will come into effect on July 1, 2011. All changes to the Pension Benefits Standards Regulations in the bill came into force as of their adoption date. These modificationswill apply to all federally regulated pension plans. According to the Office of the Superintendent of Financial Institutions Canada, the July 1st measures include: Death Benefits: Where there is no survivor on the death of the member or former member, an amount, as described in the provisions of the PBSA, must be paid to the designated beneficiary. If there is no designated beneficiary, the death benefit is payable to the estate. The differentiation between a pre-retirement death benefit for members eligible for early retirement and members who are not has been removed. Immediate Vesting: Members' pension benefits are immediately vested upon joining a pension plan. An amendment to 18 (1)(c) provides that all pension benefits are locked-in after two years of plan membership. Most pre-1986 and post-1987 references affecting benefits have been removed throughout the PBSA. Other pension measures have come into force since July 1st, 2010 and there are several for which effective dates have yet to be announced. ADDITIONAL EDUCATIONAL RESOURCES: Tax-Efficient Retirement Income Planning    

Inflation is a hot topic everywhere, and Knowledge Bureau Report readers offered valuable commentary on the subject in June. Of the 94% of readers who said "yes" to the June poll question,  many of you pointed to non-discretionary items as the first thing to go as prices rise. As food prices go up, the choice to go out for dinner is made less often. Expenditures for necessities such as housing, transportation, gasoline, electricity and food must still be made, and we have little control over the price of these staples. Although it is possible to cut back on the amounts that we consume, price increases prevent households from making much headway. Several readers remarked that repackaging smaller quantities is allowing food suppliers to keep charging the same price for less product! We can expect to see the "less for moreî trend in other areas as well. As governments at all levels struggle to rein in debt, we will have to pay more for basic services through higher user fees and certain taxes. As reader Sharon points out, "If you need gas for driving or eat food, you have to notice inflation. My property taxes alone are going up 4.6% this year.î Please let us know what you think about the July poll question: Should postal disruptions be allowed in May and June when millions count on the service for their tax refunds? We look forward to hearing from you! ADDITIONAL EDUCATIONAL RESOURCES:Debt and Cash Flow Management - Pre-order now!

There are many items of importance to Canadians included in the recent federal budget.  Educators, students, homeowners and supporters of the arts will be interested in these measures: Education and Training: The Government intends to enhance and expand eligibility for Canada Student Loans and Grants for part-time and full-time post-secondary students. Some jurisdictions may make the federal enhancements available for the 2011ñ12 academic year; it is expected that these changes will be fully implemented by all regionsin the 2012ñ13 academic year. Starting in 2012ñ13, the Government will also forgive a portion of the federal component of Canada Student Loans for new family physicians, nurses and nurse practitioners who agree to work in under-served rural and remote communities An investment $9 million over two years to expand adult basic education programming in the territories is planned in orderto increase employment opportunities for Northerners. Providing up to $10 million a year in tax relief and Registered Education Savings Plan assistance to the increasing number of Canadian post-secondary students who study abroad will begin in 2011. The 13-week minimum duration requirement will be reduced from thirteen to three consecutive weeks with respect to the Education and Textbook Tax Credits. The budget provides $10 million over two years to develop and implement an international education strategy that will reinforce Canada as a country of choice to study and conduct world-class research. The Government encourages skills certification by making all occupational, trade and professional examination fees eligible for tax relief. Many foreign-trained workers have difficulty paying for the tuition and other training costs associated with the foreign credential recognition process. Human Resources and Skills Development Canada and Citizenship and Immigration Canada will test ways to help foreign trained workers to cover these costs. Environmental Initiatives: The budget pledges $400 million in 2011ñ12 for the ecoENERGY Retrofit ñ Homes program to help homeowners make their homes more energy efficient. Budget 2011 invests $22 million over two years to help First Nations ensure that the fuel tanks that power their essential community services, such as water and waste water treatment systems, schools and community buildings, meet new environmental safety standards. The budget has set aside $58 million over two years to support a suite of programs aimed at helping Canadians adapt to a changing climate. For more information, consult EverGreen Explanatory Notes as new legislation is introduced! ADDITIONAL EDUCATIONAL RESOURCES: EverGreen Explanatory Notes

CRA reports that of the 24.5 million returns they have received as of May 31, 15.9 million were filed using EFILE, NETFILE, or TELEFILE, compared to 15.2 million last year. Paper filing continues to decrease in popularityójust over 8.5 million returns were filed on paper so far, compared to 9.1 million at the same time last year. Convenience is a big factor, and so is speed of deposit, especially during a postal strike. This is the subject of Evelyn Jacks' blog this week. Here are the figures: 2011 filing season statistics as of May 31, 2011   2010 2011 Change Returns received 24,365,078 24,512,273 0.60% Paper 9,132,581 8,569,627 -6.16% NETFILE 4,741,021 5,025,772 6.01% TELEFILE 387,694 353,482 -8.82% EFILE 10,103,782 10,563,392 4.55% A complete list of electronic options for individuals, businesses and tax preparers may be found by checking out Canada Revenue Agency E-Services. ADDITIONAL EDUCATIONAL RESOURCES: Master Your Taxes

In difficult times, activity concerning bankruptcies, consumer proposals and debt restructuring increases. If interest is, or would be, deductible to the debtor, then a debt is considered to be commercial in nature. When commercial debt is forgiven, the forgiven amount is given special tax treatment. CRA has recently updated two of its tax forms that deal with commercial debt. The debt forgiveness rules are summarized by CRA on form T2154 Application of Designated Forgiven Debt Under Section 80. In essence, when a commercial debt is settled for less than its principal amount, the forgiven amount must be applied to reduce any losses that have been carried forward. Any amount remaining may be applied to reduce other amounts such as capital cost, cumulative eligible capital and adjusted cost bases of capital properties. If not designated, any unapplied forgiven amount will be included in income. The forms that have just been updated are: 1. T2153 Designations with Respect to Forgiven Debt Under Paragraph 80(2)1 When you as the debtor settle more than one commercial obligation at the same time, use this form to designate the order the obligations were settled under the debt forgiveness rules. If the order is not designated then CRA will make the choice for you. 2. T2155 Alternative Treatment of Capital Gains Arising Under Section 80.03 on Settlement of Debt When you as the debtor surrender certain capital properties you will be considered to have a capital gain from the disposition at that time. You can treat the capital gain as a forgiven amount for the purposes of the debt forgiveness rules. You have to designate the amount using this form, and file it with your income tax return for the tax year when the disposition occurred. There are maximum amounts of designated forgiven debt allowed. Another form, T2156 Transfer Agreement for Transferer of Forgiven Debt Under Section 80.04, allows the debtor to transfer unapplied forgiven amounts to an eligible transferee, as agreed by both parties. An eligible transferee is a corporation or partnership to which the debtor is related. These debt forgiveness rules from Section 80 of the Income Tax Act are explained in greater detail in EverGreen Explanatory Notes. The rules are complex, so please consult a tax professional for advice and guidance. Planning and preparation will improve any situation when there are difficult decisions to be made. ADDITIONAL EDUCATIONAL RESOURCES:  Debt and Cash Flow Management - pre-order now!