On April 21, 2015, Finance Minister Joe Oliver tabled his first federal budget. The provisions of the budget will be of particular interest to owners of small and medium sized businesses, seniors and families with children. As well, those looking to make certain charitable donations will be encouraged by Oliver’s budget.
Below is a brief commentary on each of the key budget proposals.
For Seniors and Savers
Increase in Tax Free Savings Account (TFSA) Limit
Reduction in RRIF Minimum Withdrawals
Original guidelines set in 1992, called for a minimum withdrawal percentage from a RRIF at age 71 of 7.38% increasing to 20% from age 94 onwards. Also, in 1992, the nominal rate of return of RRIF assets was set at 7% and indexed at 1% annually;
As a result of these changes, individuals taking the minimum required withdrawal at 71 and beyond will see greater capital preservation in their RRIF. This can be illustrated in the following table:
Source – Conference of Advanced Life Underwriters (CALU) Special Report, April 2015.
Home Accessibility Tax Credit
For Business Owners
Small Business Tax Rate
Dividend Tax Credit For Non-eligible Dividends
Increase in Lifetime Capital Gains Exemption for Qualified Farming or Fishing Property
Included in the Budget but previously announced:
Other Proposed Measures
Donations involving Private Shares or Real Estate
In the past, CRA has had concerns with donations involving private company shares and property being valued appropriately.
Simplification of Form T1135 Reporting
This form which deals with the reporting of foreign property has proven to be extremely onerous for the individuals, corporations and trusts who are obligated to file it.
Registered Disability Savings Plan
In 2012, the government had announced that for those individuals who did not have the capacity to enter into such arrangements, a qualifying family member could temporarily become a planholder.
New Anti-Avoidance Rules – Tax Avoidance of Corporate Capital Gains
Budget 2015 is a document consisting of over 500 pages, so there are many more elements than what is discussed here. The budget proposals included here are the main ones that may have the most impact on your planning.
If you require assistance in determining if your personal or corporate planning will be affected, please call me and I will be happy to assist.
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Sources cited in this article:
Alex Chan, RHU, CHS, CFP, CPCA, EPC, CFSB, CLU - Certified Financial Planner & Chartered Life Underwriter
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