A Quick Budget Overview
Hi All -
Alright alright alright - after some prodding, please find my MMM birds-eye overview of the 2015 budget.
Just as a quick briefing, the 2015 budget is now released, which means your friendly neighbourhood tax accountants are scurrying around trying to make heads from tails, a mere week before the end of the 2014 tax season! As such. this is an abridged version, but hopefully I cover most of everyone's concerns...
If you're looking for commentary on synthetic equity dividends and subsection 55(2) capital gains stripping rules (I'm assuming Le Barbu, since you love asking technical questions here...haha) - you've come to the wrong place!
As such, here is a very quick overview of the budget - I've taken the liberty to include non-political satirical remarks to make this subject a bit more interesting.
First and foremost - It's balanced! Finally. Well, sort of... Apparently we took some money out of an emergency fund, and sold some GM shares. Let's just say it's close enough.
TFSA's - starting in 2015, the room is up to $10,000 per annum. This is an increase of $4,500 per year, however... The room will not be inflation indexed going forward.
Author's Note - Please. Please! Recognize that Tax Free Savings Account does not mean the money has to be in a Savings Account at the bank. This is a Tax Free Investment Account (bank lobbies be damned) so treat this accordingly, and make more than the currently offered whopping 1.05% interest rate offered at Tangerine.
Small Business (i.e. Corporations with under $500,000 profit per annum) - Expect your taxes to fall over the next few years. As posted earlier, the CCPC rate is dropping from 11% to 9% between now and the 2019 fiscal year for Federal taxes. This should mean a fair bit of savings for Entrepreneurs far and wide.
Manufacturing - If you happen to be in manufacturing, good news, you're getting a handout! A new rate of 50% depreciation on certain capital assets acquired between 2015 and 2026 will now be available... However, given how many manufacturers in Ontario are going belly-up, one wonders who will be using this one.
Home Accessibility Tax Credit - $10,000 tax credit (15% thereof) to improve accessibility of homes for "seniors" (65 and up) who are eligible for the disability tax credit. Not 65 and disabled but helping a loved one? Good news - you can claim this credit on your return (if you're paying for it) if you're a spouse, parent, grandparent, niece, nephew, or other qualifying individual. This is a maximum of $10,000 per residence, so if you're paying for upgrades to your parents' home, it's a maximum of $10,000 (assuming they're married and cohabiting.)
Lifetime Capital Gains Exemption for Farmers - Increase from $813,600 in capital gains to $1,000,000 on qualified farm or fishing properties. This is, give or take, a savings of about $25,000-$45,000 for our farmers and fishermen. If you were thinking of becoming a farmer, or selling your farm - this may help!
Donations and your Estate - The 2015 Budget now allows you to exempt gains on donations of cash from the sale of private company shares or real estate, if the proceeds are donated within 30 days of closing. This goes further than previous budgets, and does not extend to public companies at the moment, but it's a step in the right direction.
Universal Child Care Benefit - Those with little 'staches will rejoice at receiving an additional $60 per month, per child under the age of 6. You'll also get an additional $1,000 increase in room to claim childcare expenses.
Teenager stealing your booze and racking up your cell-phone bill? Good news - you'll now be entitled to $60 per month for children from ages 6 to 17. That should cover the unlimited data plan and some make your own brew... Right?
There are other more technical issues - but this will likely cover most of what you're looking for.
Much of this is information we've all known for some time, but are now a reality in black and white. Is it a game changer? Not particularly, but much of this is a step towards saving taxes for those prudent enough to take advantage.
The only game changer, and this will be interesting, is the impact of the TFSA on the once firmly held ground of the RRSP. With $10,000 per year in room going forward, this is very likely to become the investment vehicle of choice, especially since withdrawals are NOT INCOME. This means you can withdraw from the TFSA, and these funds will not have any affect on those pesky OAS and CPP claw-back rates.
Hope everyone has a happy and healthy 2015 - and can take advantage of these savings both now and going forward.