The new Liberal government delivered its first federal budget on March 22nd in Ottawa this week.
While you’ve probably seen plenty of media coverage, I thought you would appreciate an overview of how some of the budget items relate to investments and taxes.

 

Prime Minister Justin Trudeau spent heavily in this budget, leading to a projected $29.4-billion shortfall this year (three times the promised $10 billion shortfall). The good news? Part of that spending may benefit you:

 

- OAS eligibility returns to age 65 – great news for folks born April 1, 1958 or later.
- The Canada Child Benefit replaces the Canada Child Tax Benefit and the Universal Child Care Benefit. The CCB is tax-free, unlike before, and government says nine out of 10 families will receive more in child benefits than under the current system.

 

That said, there seems to be more bad news than good as the government also took away some valuable tax planning perks:

• Switches between corporate-class funds will no longer be tax-free after September 2016. If you are planning to change funds, let’s talk about rebalancing prior to then.
• Potential treatment of any gain realized on the sale of a linked note as interest income (instead of being considered a capital gain) on sales of notes that occur after Sept 2016.
• The promised small business tax cut has been frozen at 10.5%. There are also more restrictions on sharing the small business deduction. If you’re a business owner, let’s talk about other ways to save tax.
• Special tax treatment for insurance policy transfers to corporations. If you own a business and were planning on doing such a transfer, we should revisit that strategy, as it’s no longer tax-advantaged.
• An end to income-splitting for couples with children; the Children’s Fitness and Arts Tax Credits will be phased out by 2017.
• There will no longer be education and textbook tax credits as of January 1, 2017, but the impact should be relatively minor.
• The budget also proposes to make changes to other tax rules that either use or are affected by the introduction of the top personal tax rate of 33%.

Members of my Financial Advisory Support Team were granted access to the Federal Budget lock-up in Ottawa on Tuesday and as a result, I’m happy to offer you a detailed 8 page summary of the key tax measures that are of most interest to Canadian investors – just ask for a copy and I’ll be happy to send it along to you. In the meantime, if you’d like to discuss these and other federal budget initiatives and how they affect your financial plan, please do not hesitate to contact me anytime