Highlights of the 2016 Federal Budget
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The new Liberal government delivered its first federal budget on March 22 in Ottawa.
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. Here are the highlights:
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 and will provide a maximum benefit of $6,400 per child under the age of 6 and $5,400 per child from age 6 to 17. The benefits will be reduced based on your family income.
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.
The promised small business tax cut has been frozen at 10.5%. 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.
The Children’s Fitness and Arts Tax Credits will be reduced to $500 for Fitness and $250 for Arts in 2016 and fully 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 family tax cut eg. notional income splitting will be eliminated after 2015 tax year.
A new school supply tax credit will be available for teachers who spend up to $1000 for eligible supplies. This is a 15% refundable tax credit.
There will be an increase in the GIS "Guaranteed Income Supplement" by up to $947 per year.
I hope you find these highlights useful. If you’d like to discuss these and other federal budget initiatives and how they affect your financial plan, please don’t hesitate to contact me.
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