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?

Ontario Budget Much like the Federal budget of last week, the Ontario budget announced today reads like a biography of everything that has gone well since 2003. There are very few changes on a tax front with "Deficit Controlî being the keyword. However, the Ontario government did announce a couple of lateral "tax tweaks." Ontario Trillium Benefit The Ontario government currently provides three refundable tax credits to Ontario residents, the Ontario Sales Tax Credit, the Ontario Energy and Property Tax Credit, and the Northern Ontario Energy Credit. The Province proposes to combine these refundable tax credits into the Ontario Trillium Benefit (OTB) in July 2012.  While there is no change in the value of the credits, in order to better align the receipt of these credits with the expenses that people face, the payments of these three credits would be delivered on a monthly basis. Ontario Book Publishing Tax Credit The Ontario Book Publishing Tax Credit is a 30 per cent refundable tax credit, to a maximum of $30,000, available to Ontario book-publishing corporations for qualifying expenditures related to publishing and promoting a book by a Canadian author in an eligible category of writing.  For expenditures incurred after March 29, 2011, the Budget proposes to change the 12-month period for qualifying marketing expenditures to a period beginning one-year before and ending one year after the date of publication. New Brunswick Budget The 2011 budget was unveiled in New Brunswick last week. As most governments are focused on slaying deficit dragons, tax cuts and spending increases were front and centre. Pre-budget consultations in New Brunswick resulted in an awareness of public concerns that was reflected in the budget measures. Residents identified health and senior care, economic development, job creation and prudent financial management as primary concerns. Spending initiatives addressed in the budget include healthcare, job strategies, poverty reduction, and education. The government plans to balance the budget by 2014-2015. Debt and deficit reduction is the main theme of the New Brunswick budget, with new revenue from increased tobacco and gas tax rather than higher income tax rates. This should also help Nova Scotia communities close to the New Brunswick border who have been losing customers to New Brunswick, more so since the HST rate in Nova Scotia rose to 15% last July. The tax on a pack of smokes in New Brunswick has risen from $2.94 to $4.25, while fuel tax on gasoline increased from 10.7 cents per litre to 13.6 cents. Government wage restraint will also play a part in moving toward a balanced budget, as will the delay in further personal income tax rate reductions. For 2011, the lowest tax rate for New Brunswick residents dropped from 9.3% to 9.1% on the first $37,150. For the next $37,150, the 2010 rate of 12.5% was reduced to 12.1% in 2011. Income from $72,843 to $118,427 attracts a 12.4% rate, down from 13.3% in 2010. The highest tax rate is 14.3% and this is unchanged from 2010, reversing the announced reduction in last year's budget. The latest budget confirmed that, for 2012, all rates will remain the same with 2% indexing on personal income levels. The corporate tax rate is scheduled to fall from 13% in 2008 to 10% in 2012, rather than the previously planned reduction to 8%. The small business corporate tax rate has been at 5% since 2008 and is scheduled to creep down to 4.5% in 2012. The small business limit will remain at $500,000, the same level since 2009. Saskatchewan Budget Resource-rich Saskatchewan can afford to address debt reduction, tax relief and a broad range of spending initiatives. Increased funding for healthcare, child care, tourism, the environment, education, child welfare, infrastructure, policing, rural initiatives, research and innovation, energy and resources and affordable housing have been written into this surplus budget. Personal tax relief is highlighted by increases in the personal exemption rates. The basic personal and spousal/equivalent amounts for 2011 will rise from $13,535 to $14,535. The net income threshold for the spousal/equivalent amounts consequently rises from $1,354 to $1,454. The amount for children will also increase by $500 to $5514. Personal tax rates for 2011 are unchanged, although income levels have been indexed. Tax of 11% is payable on the first $40,919 of income with 13% due on the next $75,992 and 15% on higher income levels. The small business corporate tax rate has fallen from 4.5% to 2%.  Consequently, the dividend tax rate for small business dividends will be reduced from 6% in 2010 to 5% for 2011 and 4% for 2012.   ADDITIONAL EDUCATIONAL RESOURCES:

The 2011 Federal Budget tabled last week contained some interesting proposals regarding charitable donations. Although this budget is on the shelf for the moment, it is reasonable to expect that some of all of these measures will be included in future legislation. Individual taxpayers will notice modifications to current rules. As well, regulations that apply to registered charities now will be extended to apply to other qualified donees such as registered Canadian amateur athletic associations (RCAAAs) and municipalities. Heads up ñ there is more paperwork on the horizon! Here is a list of changes to watch for: Any organization that can issue a tax receipt for a donation (known as a qualified donee) will have to be on a list that is available to the public. The Income Act spells out the rules for donation receipts. If these rules are broken registered charities will have receipting privileges revoked or charitable status rescinded. Penalties that currently apply to registered charities will now apply to RCAAAs. All qualified donees must maintain books and records that are accessible to CRA. Failure to do so or will result in sanctions. Penalties that now apply to registered charities for failing to file information returns will be extended to RCAAAs. RCAAAs must now operate exclusively for promotion of amateur athletics rather than primarily. Feedback will be solicited to define allowed activities. A registered charity will be sanctioned if it provides an "undue benefitî to any person. Proposed measures will apply this rule to RCAAAs. Public availability of certain information pertaining to RCAAAs is proposed. The criminal history or past misconduct of individuals involved in charities will be grounds to refuse or revoke registration. Public consultation is planned to flesh out this policy. When donations received are subsequently returned to the taxpayer, the qualified donee must have a revised receipt issued to the donor and a copy sent to CRA. This will allow reassessment of previously claimed donations that have been cancelled or reduced. A donor will not receive a donation receipt for a donation of a NQS (non-qualifying security i.e. share in a private corporation) until, within five years of the donation, the shares have been sold for consideration that is not another NQS. In other words, there will be no receipt until the real value of the donation has been realized. The donation of an option to acquire a property is allowed and, in the past, a receipt has been issued immediately. New rules will delay the receipt until the option has been exercised. As well, the donation receipt will be issued for the difference between any amount paid for the property and/or option by the donee (the advantage) and the Fair Market Value of the property at the time the option is granted. If the advantage exceeds 80% of the FMV then it is not considered a gift and there will be no receipt. Donations of publically-traded flow-through shares will still be allowed. However, unlike other publically-traded securities that are donated, the elimination of tax on the capital gain will apply only to the amount that exceeds the original cost of the flow-through share, rather than the entire amount. This will greatly reduce the tax advantage of donating flow-through shares in the future. The 2011 Budget indicated that this change would be in effect for flow-through shares acquired on or after March 22, 2011. Sooner or later the government will enact changes to close tax loopholes that are costing it money. It is important to be aware of these proposed changes when counselling your clients in regard to their philanthropic activities. EverGreen digs deeperÖ  

It is hard to comprehend the magnitude of the disaster unfolding in Japan. The physical and mental suffering caused by the earthquake and tsunami are compounded by the fear of a nuclear catastrophe. How can Canadians help in a meaningful way? There are many organizations that have mobilized resources for the people of Japan, and our monetary donations will ensure that sustained relief efforts begin without delay. Our government includes donation advice on its website set up for natural disasters. Our public broadcaster, the CBC, lists many reputable organizations accepting money right now for Japan relief. Our federal government and provinces encourage us to give generously by providing tax credits for money that we spend on others. A donation of $1,000 to bring hope to a troubled nation costs much less than that amount, as illustrated below. Province of Residence Federal Tax Credit Provincial Tax Credit Total Tax Credit Cost to donate $1,000 British Columbia $262.00 $127.72 $389.72 $610.28 Alberta $262.00 $188.00 $450.00 $550.00 Saskatchewan $262.00 $142.00 $404.00 $596.00 Manitoba $262.00 $160.80 $422.80 $577.20 Ontario $262.00 $99.38 $361.38 $638.62 Quebec $262.00 $232.00 $494.00 $506.00 New Brunswick $262.00 $119.80 $381.80 $618.20 Nova Scotia $262.00 $185.58 $447.58 $552.42 Prince Edward Island $262.00 $153.20 $415.20 $584.80 Newfoundland $262.00 $121.80 $383.80 $616.20 Yukon $262.00 $116.16 $378.16 $621.84 North West Territories $262.00 $124.20 $386.20 $613.80 Nunavut $262.00 $100.00 $362.00 $638.00   Please give what you can, when you can, to support this most worthy cause.

Evelyn Jacks, President of the Knowledge Bureau was pleased to accept an invitation from the Finance Minister to hear the budget speech and join the Minister at a post budget reception. The Knowledge Bureau news team is pleased to present this summary of the major provisions for individuals, families and business in Canada. Special thanks to Alan Rowell, Betty MacDonald and Walter Harder for this analysis.

The 2011 Federal Budget has been released and financial professionals are digesting the contents. There are a lot of small changes that may bring modest tax relief to certain segments of the population, but no big surprises and no significant program changes. The underlying question, however, is will it still be with us by the weekend?This commentary will review some of the important personal and business tax changes and some additional interesting highlights and measures presented today, all of which will be analyzed in more detail in the coming weeks in Knowledge Bureau Report. Families will be treated to a series of new proposals including a new Children's Arts Tax Credit, a Family Caregiver Tax Credit and enhanced claims for medical expenses for those supporting other dependants. However, the tax on split income will be extended to capital gains on shares which produce dividend income taxed under this provision. Students will find new provisions for claiming exam fees and education tax credits for studying in short term courses abroad. Investors will be interested in changes to RESPs, RDSP, IPP and RRSP rules Small businesses may benefit from a temporary Hiring Credit, designed to offset E.I. premiums for new employees in 2011.  In addition, the accelerated CCA rate for equipment and machinery has been extended for another two years. Doctors and nurses who go to remote areas to practice will benefit from some student loan forgiveness. RESP assets can be more easily moved between siblings and students studying abroad will have expanded access to education-related tax credits. The most vulnerable of seniors will receive a boost to the Guaranteed Income Supplement, but there are no changes to RRIF income requirements, TFSA contribution rules or the pension splitting age limit as many had hoped. For the disabled, RDSP owners with shortened life expectancy will be exempt from some of the clawback of grants and bonds for withdrawals during the first 10 years of a plan. RRSP anti-avoidance rules are meant to discourage "RRSP strips" that have resulted in the loss of life savings for some Canadians. Individual Pension Plan contribution and withdrawal rules are modified to level the playing field with other retirement plans. Employee Profit Sharing Plans are under the microscope to make sure that they remain an incentive to hard work by dedicated employees. Additional classes of organizations that receive donations must now jump through the hoops required of registered charities. Financial literacy got a boost in today's budget. There will be an additional 3 million dollars per year allocated to the effort, in addition to the 2 million currently invested in the Financial Consumer Agency of Canada (FCAC). And, plans are in place to enable the new Financial Literacy leader to soon be appointed. Consumer protection measures include banning those unsolicited cheques that arrive at your door, inviting you to dip into the unused credit limit on your credit card. There is no grace period, so the interest clock starts ticking immediately. Pre-paid gift cards are being scrutinized also. Time will tell whether these tax measures will be implemented, and whether they will make a difference to Canadians, as the opposition parties have noted they will not support it.

Employment Insurance The one new initiative announced in the Budget that will have a positive effect for small business is the announcement of a "Hiring Credit for Small Business." The Budget proposes a temporary Hiring Credit of up to $1,000 against a small employer's increase in its 2011 EI premiums in excess of the 2010 calendar year. For the purposes of the credit, a small business is an employer whose total EI premiums were at or below $10,000 in 2010. Employers currently pay 1.4 times the amount of EI premiums withheld from employees pay cheques. For 2010 the maximum EI per employee paid by the employer was $1,046.30 per employee. The Government also announced that it would take further action to limit the potential increase in EI premiums. Currently EI premiums are scheduled to rise by 10% as of January 1, 2012. Capital Cost Allowance The budget announced the extension of the temporary accelerated capital cost allowance treatment for investment in machinery and equipment in the manufacturing and processing sector until 2014. This allows qualifying expenditures acquired before 2014 to claim an accelerated 50% straight-line method of depreciation. Also announced was the inclusion in class 43.2 (50% declining balance) of equipment designed to generate electricity in a process in which all or substantially all or the energy input is from waste heat. Corporate Partnerships The budget introduces a Stub Period, for corporations that are members of partnerships where the fiscal year-end of the corporation differs from the year-end of the partnership. This will eliminate the ability of corporations to structure year-ends creating a tax deferral.