Budget 2016 saw some significant changes by the Liberal Government that has a large impact on many segments of the Canadian population. Below are some highlights and ‘lowlights’ (is that even a word?) about the budget. Your Trusted Saskatoon Financial Planner can help you navigate the ever-changing world of investing and taxation. Contact me for your free, complimentary review!
Budget 2016 Changes/Additions
Decrease the eligibility for old age security (OAS) back to age 65 from 67.
Guaranteed Income Supplement
Low income single seniors can receive up to 10% more – up to $947 annual.
Canada Child Benefit
There is a new tax-free benefit with up to $6,500 per child under 6, as well as up to $5,400 per child aged 6-17. This change replaces all current child benefit programs
Child Disability Benefit
Families with disabled children under the age of 18 will continue to receive their disability benefit of up to $2,730
Affordable Higher Education
The Canada Student Grants program increases to $3,000 for students from low income families. As well, up to $1,200 for students from middle income families in 2016-2017.
School Supply Tax Credit
A new refundable tax credit exists for educators who purchase up to $1,000 of eligible school supplies beginning in 2016.
Small Business Tax Rate
The federal government has indicated that the small business tax rate will remain unchanged, at 10.5% for future years.
Budget 2016 Deletions/Revisions
Family Income Splitting
The federal conservative government implemented a Family Tax Cut by way of income splitting for families with new children. The new Liberal government has eliminated this starting in 2016.
Child Fitness & Arts Credits
The Liberal government has eliminated the fitness tax credit, reduced by 50% in 2016 and gone in 2017.
Education & Textbooks
Education and textbook credits will be eliminated in 2017.
Proposed tax exemption on capital gains of donated corporate shares or real estate will be eliminated in 2017.
Corporate Class Mutual Funds
Investors will no longer be able to shelter capital gains when switching between their corporate class mutual funds (commonly known as “F” class funds). This change will come into effect September 2016.
Life Insurance Distributions
Business owners were able to use life insurance policies to make tax-free distributions (effectively, by selling personal policies to their business for fair market value). This was a very effective way for business owners to extract some tax free capital and preserve their life insurance policies. This has been closed effective March 22nd.