Budget 2011: What it means to you

With the federal budget deficit projected to be 25% lower in fiscal 2010-11, there was some “wiggle room” for the Conservatives to introduce new initiatives that will be of benefit to Canadian families and individuals. Of note were the Children’s Arts Tax Credit, an increase in the Guaranteed Income Supplement (GIS), the Family Caregiver Tax Credit, and an extension of the ecoENERGY Retrofit – Homes program.

Several of the proposals &#8212 notably the GIS and ecoENERGY commitments &#8212 dovetail with key NDP demands. If the latter are happy with the concessions, the budget may have a chance of surviving the non-confidence motion said to be in the works later this week.

Children’s Arts Tax Credit
Piano lessons will become a little more affordable. Parents will be able to claim a 15% non-refundable credit of up to $500 on artistic, cultural, recreational, and developmental activities in which children under the age of 16 are enrolled. Eligible activities include art, chess, crafts, drama, girl guides, languages, music, painting, public speaking, scouts, and tutoring.

The Federal Government estimates $430 million will be handed out to families over the next five fiscal years through the Children’s Arts Tax Credit. Along with the existing Fitness Tax Credit, a family of four may claim a credit of up to $2,000 per year for their two children.

Enhancement to the GIS
Good news for seniors who rely mainly on GIS and Old Age Security (OAS) benefits. Starting July 1, 2011, annual GIS payments are to be boosted for eligible single seniors (up to $600) and senior couples (up to $840). An estimated 680,000 seniors will receive more than $300 million a year under this measure.

Family Caregiver Tax Credit
The budget acknowledges the personal sacrifices of those who care for loved ones: a proposed 15% non-refundable credit “on an amount of $2,000” for caregivers of infirm relatives, “including, for the first time, spouses, common-law partners and minor children.” Caregivers will claim the Family Caregiver Tax Credit under one of several credits such as the Child Tax Credit, Infirm Dependant Credit, or the Caregiver Credit. It is expected to distribute more than $500 million over the next five fiscal years, beginning after January 1, 2012.

This will be a new credit for some, a supplemental one for others. It will be, for example, a new tax break for the wife who takes time off from work to drive her infirm husband to appointments and attend to his needs. It will be complementary tax relief, for example, in the case of the daughter who receives the existing Caregiver Credit for looking after a parent, or the parents who receive the Disability Tax Credit for assistance provided to an 11-year-old child.

Extension of ecoENERGY Retrofit – Homes program
The federal government will allocate $400 million to extend the ecoENERGY Retrofit – Homes program into fiscal 2011-12. This program provides up to $5,000 per dwelling toward the costs of improving energy efficiency through measures such as replacing heating systems, cooling systems, doors or windows.

Other measures
Several other measures pertaining to families and individuals were announced in the budget:

• promote financial literacy by appointing a Financial Literacy Leader
• introduce legislation improving stability of housing finance and mortgage insurance
• boost consumer protection by banning unsolicited credit card cheques (and other tactics)
• repeal rule limiting Child Tax Credit to one claimant per household
• expand eligibility for Canada Student Loans and Grants (by increasing income thresholds and the amount of money that can be earned without affecting financial assistance); students studying abroad to get some tax relief and assistance, as well
• amend the Tuition Tax Credit to recognize fees for professional examinations
• one-year extension of Employment Insurance programs that allow claimants to earn extra money and to receive enhanced benefits in regions of higher unemployment
• elimination of mandatory retirement age for federally regulated employees
• renewal to fiscal 2013-14 of a program (Targeted Initiative for Older Workers) that gives displaced, older workers access to training and employment programs
• rescind ceiling on the amount of eligible expenses that caregivers can claim under the Medical Expense Tax Credit for financially dependent relatives
• easier access to funds in Registered Disability Savings Plans for beneficiaries with shortened life expectancies.