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2011 Federal Budget©

Minister of Finance James Flaherty presented his 2011 federal budget on March 22, 2011. Opposition parties said no and the budget is now being revised at the point of writing. If the revised budget does not meet the approval of the opposition parties, there will be a federal election as early as in May 2011. Tax-related highlights contained therein are as follows:

Personal Tax Changes

  1. Seniors and pensioners will receive about $2.3 billion in additional targeted tax relief for the 2011–12 fiscal year. In 2011, a single senior can earn at least $19,064 and a senior couple at least $38,128 before paying federal income tax.
  2. Enhancing the Guaranteed Income Supplement (GIS) for those seniors who rely almost exclusively on their Old Age Security (OAS) and the GIS and may therefore be at risk of experiencing financial difficulties. This measure will provide a new annual top-up benefit of up to $600 for single seniors and $840 for couples. This measure represents an investment of more than $300 million per year, and will improve the financial security of more than 680,000 seniors across Canada.
  3. Changing federal rules to eliminate the mandatory retirement age for federally regulated employees in order to give older workers wishing to work the option of remaining in the workforce.
  4. 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.
  5. Removing the limit on the amount of eligible expenses that caregivers can claim under the Medical Expense Tax Credit in respect of financially dependent relatives.
  6. Increasing flexibility to access Registered Disability Savings Plan (RDSP) assets for beneficiaries with shortened life expectancies and following through on the commitment to review the RDSP in 2011.
  7. Introducing a new 15% Children’s Arts Tax Credit, provided on up to $500 of eligible expenses for programs associated with children’s artistic, cultural, recreational and developmental activities.
  8. Income from scholarship and bursary is exempted from tax. Textbook Tax Credit is introduced to help families with education costs.
Business Tax Changes
  1. One time hiring credit for small businesses
    To encourage hiring, small businesses can get a tax credit of up to $1000 against its increase in 2011 Employment Insurance (EI) premiums compared to those paid in 2010. The credit will be available to employers whose total EI premiums were at or below $10,000 in 2010.
  2. Accelerated capital costs allowance (CCA) extended
    The government will extend the 50% straight-line accelerated CCA for manufacturing or processing machinery for another two years.

Improved tax fairness

The Canada Revenue Agency (CRA) will improve its website. By April 2012, it will introduce written electronic answers to written queries from clients using the My Business Account interface.

For penalties, CRA will also review the penalty structure for the late filing of information returns, with particular regard to its impact on small businesses. Any resulting changes to the penalty structure to be announced in advance of the filing due date for the 2011 taxation year.

Remarks

This budget contains minors changes in tax-related matters. Since it is now being revised, further comments are irrelevant at this time.

           

           

           

[This page was added on March 23, 2011, last revised on March 23, 2011.]