2016 Budget Overview
The new Liberal government delivered its first federal budget on March 22 in Ottawa.
While you’ve probably seen plenty of media coverage, we thought you would appreciate an overview of how some of the budget items relate to investments and taxes.
Prime Minister Justin Trudeau spent 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.
- 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.
The bad news is, the government also took things away:
- Switches between corporate-class funds will no longer be tax-free after September 2016. If you are planning to change funds, they should be done before September 2016.
- The promised small business tax cut has been frozen at 10.5%.
- Special tax treatment for insurance policy transfers to corporations. If you own a business and were planning on doing such a transfer, it’s no longer tax-advantaged and may no longer make sense for you.
- 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.
In addition, I am including a summary from Fidelity Investments that lists some other important proposals.
We 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 us.
Budget Analysis from Fidelity Investments