The Federal Government released their budget on last week on Tuesday. Here's an overview of some of the key items.
The TFSA or Tax Free Savings Account was introduced in 2009. The contribution limit was $5000 per year from 2009 to 2012. That was increaseed in 2013 uto $5500 per year in in the most recent budget, they increased the annual limit to $10,000 effective immediately. The new limit will not be increased with inflation. The TFSA allows you to hold investments tax sheltered and take them out tax free.
Related article: Understanding the basics of the TFSA
Minimum RRIF payments
This could make for a topic all by itself. RRIF minimum payments (the formula to calculate minimum payments) have been lowered for 2015 and going forward. From the information I have seen since the budget’s release, the new minimums at age 71 are close to 20-30% lower than pre budget calculations. As the RRIF holder gets older though the formula eventually calculates out at the same percentages as before. Remember, these minimum payment calculations are for age 71 and older. If you start a RRIF and you are younger than 71, old rules apply.
Related article: RRIF minimum income rules
Small Business Tax Rates
In the 2015 Federal Budget the small business tax rate will be cut from 11% in 2015 to 9% in the year 2019. The plan is to cut a half a point per year. This rate applies to the first $500,000 of active business income. The actual rate a company will pay will differ from province to province because provinces collect business tax as well.
Capital Gains Exemption for Farms and Fishing Businesses
The Lifetime Capital Gains Exemption for Farm and Fishing Property will be increased to $1 Million dollars. However, the number remains at $813,600 this year and will increase with inflation until it hits $1 Million.
Reporting of Foreign Assets
There will be a simpler, more efficient, way to report foreign assets. Form T1135 or if you prefer a more verbose way of saying it, the Foreign Income Verification Statement, was used for individuals, trust, Corporations etc., that own foreign property with a cost of $100,000 or more. In this budget it is proposed that if the total is less than $250,000 there will be an easier way to report and anything $250,000 or more will use the old system.
Registered Disability Savings Plan (RDSP)
I have several client who have set these plans up. The RDSP is an excellent savings plan. Three years ago the Government said that a qualified family member was allowed to be the holder of an RDSP for an adult individual who may lack the capacity to do so. This provision was to run out in 2016. The Federal Budget of 2015 plans to extend this provision to 2018 instead of 2016.
This is just a quick overview of the Federal Budget. Of course there are many other items announced and changes to occur. For a more in depth review visit the Government of Canada web site.