Federal Budget Highlights March 2016

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.

The Liberals will spend heavily in this budget, leading to a projected $29.4-billion shortfall this year. 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 who were projected to receive a delay in OAS payment by up to two years or age 67.

  • 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. It will be a graduated benefit based on combined Income starting at those below $30,000 and will be phased out as family income rises. The maximum eligible amount will be $6,400 for children under 6 and then $5,400 for those aged 6 to 17. Remember those amounts are for those whose combined earnings are $30,000 or below. The benefits reduce to ZERO when your combined incomes reach $189,000.

CLICK THIS LINK FOR THE CRA INCOME CALCULATOR to see what you could be eligible to receive:

The bad news is, the government also took things away:

  • Select Mutual Funds for Non Registered money had an unfair tax benefit which the government has now closed. Switches between special 'corporate-class' investment mutual funds will no longer be tax-free after September 2016.

  • 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 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.

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.

#budget #mutualfunds #childcarebenefit #OAS #retirement #calculators

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