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2011 Federal Budget (announced on 6 June 2011)©

Minister of Finance James Flaherty presented his first 2011 federal budget on 22 March 2011. The subsequent federal election had left this budget in limbo. After winning the May 2 election, the Conservative Party formed a majority government and announced its 2011 budget again on 6 June.

There is no tax increase nor changes to corporate tax rate reductions previously promised. Tax-related highlights contained therein are as follows:

Personal Tax Changes

  1. Enhanced Guaranteed Income Supplement (GIS) for seniors who rely almost exclusively on their Old Age Security and the GIS and may therefore be at risk of financial difficulties. This measure will provide a new top-up benefit of up to $600 annually for single seniors and $840 for couples. This measure represents an expenditure of more than $300 million per year aiming to improve the financial security of more than 680,000 seniors across Canada.
  2. Attracting more health care workers to underserved rural and remote communities by forgiving up to $40,000 of the federal component of Canada Student Loans for new family physicians and up to $20,000 for nurse practitioners and nurses.
  3. Removing the current $10,000 limit on eligible Medical Expense Tax Credit in respect of a dependent relative (other than a child who has not reached the age of 18 years before the end of the taxation year). This measure will apply to the 2011 and subsequent taxation years.
  4. Introducing a Family Caregiver Tax Credit and Children's Arts Tax Credit to support Canadian families.
  5. Allowing greater flexibility with respect to the allocation of RESP assets among siblings by expanding the ability to transfer between individual RESPs for siblings, without tax penalties or triggering the repayment of Canada Education Savings Grants, to individuals who are not connected by blood or adoption, such as aunts or uncles. This proposal will apply to asset transfers that occur after 2010.
  6. Introducing a new Family Caregiver Tax Credit, a 15% non-refundable credit on an amount of $2,000 that will provide tax relief to caregivers of all types of infirm dependent relatives including, for the first time, spouses, common-law partners and minor children.
  7. Introducing a Volunteer Firefighters Tax Credit for volunteer firefighters who perform at least 200 hours of service in their communities.
  8. Providing nearly $870 million over two years to address climate change and air quality, including the extension of the ecoENERGY Retrofit – Homes program that will help homeowners make their homes more energy efficient and reduce the burden of high energy costs.

Business Tax Changes

  1. Providing Children's Special Allowances (CSA) to an agency in respect of a child who is a former Crown ward and who has been placed in the custody of a legal guardian, tutor (in Quebec) or a similar caregiver and the agency provides financial assistance for the maintenance of the child.
  2. Offering a one-time credit of up to $1,000 against a small firm’s increase in its 2011 Employment Insurance (EI) premiums over those paid in 2010. This new credit will be available for employers whose EI premiums were at or below $10,000 in 2010.
  3. Providing a temporary Hiring Credit for Small Business to encourage additional hiring by this sector.
  4. Extending the accelerated capital cost allowance treatment for investments in manufacturing and processing machinery and equipment for two years.
  5. Extending the temporary 15-per-cent Mineral Exploration Tax Credit for an additional year (until March 31, 2012) to continue to help companies raise capital for mineral exploration.

Remarks

In essence, this Budget is more or less the same as the one announced in March 2011.

It is noteworthy to remark that Children's Special Allowances (CSA) in this Budget which appears unimportant to most taxpayers but has a substantial impact on families, children and society.

CSA is a tax-free monthly federal payment made to agencies, institutions and foster parents who are responsible for the care and education of children under 18 who physically reside in Canada and who are not in the care of their parents) as governed by the Children’s Special Allowances Act (1992, c. 48, Sch.). To special interests in the child protection industry, it is one of the main sources of income.

According to the figures provided by Treasury Board of Canada Secretariat in Table 2.1 below, CSA payments are in 9-digit figures and are rising every year. CSA is also a financial incentive for provincial child protection agencies to remove children from their parents and keep them in government sponsored foster/group homes as long as possible.

This 2011 federal budget announced on 6 June 2011 stipulates that for 2012 and subsequent years, the payment of a CSA to an agency (such as the Ministry of Children and Family Development in British Columbia) in respect of a child who is a former Crown ward and who has been placed in the custody of a legal guardian, tutor (in Quebec) or a similar caregiver and the agency provides financial assistance for the maintenance of the child. This Budget would ensure that an agency receives the CSA in respect of a child that it continues to financially support even if the child has been released to the care of a court-appointed guardian, tutor or similar caregiver.

This extended payment of CSA will further enhance tax burden on Canadians and create financial incentive to remove and adopt children.

           

           

           

[This page was added on 12 January 2012, last revised on 30 January 2012.]