The 2011 Federal Budget Highlights

by Tax Guy - Burlington Accountant on March 22, 2011 Print This Post Print This Post

The 2011 Federal budget does not contain any major changes.

There are a few minor tax credit available, enhancements to GIS, and some tax loopholes have been closed. The most significant changes is the $600 per year enhancement to GIS for single seniors and $840 for couples.

Following these highlights are links to budget information and analysis from financial professional throughout Canada.

Guaranteed Income Supplement

The federal government has proposed to enhance the Guaranteed income Supplement (GIS) for low income seniors by providing a top-up of $600 per year for single seniors and $840 for couples.

Doctors For Rural Communities

Attracting health care professionals to rural areas is an important factor. The government wants to encourage doctors to settle in rural areas by forgiving up to $40,000 of the federal portion of Canada Student Loans.

Students & Learning

The eligibility for Canada Student Loans and the Grant Program for full and part-time students has been expanded.

For regulated professionals and skilled trades the tuition tax credit has been extended to their examination fees.

New Tax Credits

The government has introduced three new tax credits:

  • Family Caregiver Tax Credit – This will be a non-refundable tax credit of 15% of $2,000 to provide relief for caregivers of all types of infirm relatives, including spouses, common law partners, and minor children.
  • Children’s Arts Tax Credit – This is a non-refundable tax credit of 15% of eligible cultural expenses for children up to $500.
  • Volunteer Firefighters Tax Credit – This non-refundable credit is available to volunteer for fighters who perform at least 200 hours of service. The credit is 15% of $3,000.

EcoENERGY Retrofit

The ecoENERGY retrofit program has been extended to allow Canadians to make homes more energy efficient.

Closing Tax Loopholes

The federal government has enhanced the RRSP anti-avoidance rules to align them with those introduced last year concerning the TFSA.

RRSP Advantage rules – The annuitant of an RRSP will be subject a special tax on certain swap (swapping from RRSP and on-registered accounts) transaction that take advantage of differences in share prices.

Prohibited investments – There will be a punitive, 50% of the fair market value of the prohibited investment held in an RRSP.

IPP Rules – Plan members will now be required to take withdrawals at age 72 to align with the RRSP conversion rules. In addition, past service contributions must now come from the plan members RRSP and RRSP contribution room to eliminate any large IPP contributions for past service.

Charitable Donations & Flow Through Shares – The proposed rules will limit the amount of the capital gain that would not be subject to a capital gain to the excess of the value of the shares at the time they are donated over the cost of the shares.

Other Budget Resources

  • Ernst & Yong’s Federal and Provincial Highlights are here.
  • KPMG’s Federal Budget Highlights are here.
  • PwC Budget Highlights are here.
  • Federal Department of Finance documents are here.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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