After years of indulging taxpayers, the federal government has opted for the budget-lite approach.
Whether you see that as a good thing or not depends on the extent to which the budgets of the past few years have primed you to expect new savings programs like the Tax Free Savings Account or tax breaks like the Home Renovation Tax Credit.
The Conservative government's latest budget is bereft of marquee moves like these. In fact, there's a theme of tightening tax loopholes, which arguably means increasing taxes for a select few.
But if you view this budget in the context of a struggling global economy that has left Canada better off than most but hardly unscathed, then maybe keeping the status quo for the most part on taxes is a victory.
The key message in the budget could very well be this simple sentence: "The Government will not raise taxes and will not cut transfers to persons and other levels of government." The federal deficit is pegged at $53.8-billion for the current fiscal year, but the government does not see taxpayers as part of the solution. The GST remains untouched, and so do personal income taxes.
The Government will not raise taxes and will not cut transfers to persons and other levels of government. Federal Budget 2010
The budget measures most widely relevant to your financial life could well be ones that highlight this government's continued interest in the way banks treat their customers. There's a proposal to limit the hold period on cheques to four days from the current seven, and allow people access to the first $100 in 24 hours.
As well, there's a ban on the use of negative billing, a practice where a bank customer might, for example, have to specifically indicate a desire not to buy life insurance coverage to pay off the balance on a mortgage or credit card. If you've ever tried to break a mortgage to take advantage of lower interest rates, you'll appreciate a proposal to standardize the calculation and disclosure of mortgage prepayment penalties.
For individual taxpayers, the government's loophole plugging will primarily affect employees who receive stock options. The first change will affect stock option benefits paid in cash, rather than in actual stock. The problem as far as Ottawa is concerned is that both employees and employers can claim tax breaks in this situation. The budget proposes changes that would make the stock option tax deduction available only in cases where employees use their stock options to buy shares of their employer.
Starting immediately, the government will also require that taxes be paid on stock options related to publicly traded companies in the year when they are exercised by employees. The option to defer taxes until the stock is sold is being eliminated.
. Weigh in on whether you would stash some extra money into an RRSP, RESP or a TFSA.
Rules are also being toughened to exclude use of the medical expenses tax credit by people undergoing surgery strictly for cosmetic reasons - think Botox treatments or hair replacement - and to ensure that scholarship, bursaries and fellowships retain their tax-exempt status only when used for educational purposes.
For single parents, the budget will remove an inequity that could potentially cause them to pay more in taxes on universal child care benefits than a single-earner two-parent family with a similar income.
The budget would allow single parents to have their benefits, which total $100 per month for kids under 6, taxed in the hands of dependent children. The net effect would be to eliminate tax on the benefit in most cases, which in turn would save a single parent with one child up to $168 in 2010.
In a tweak of the registered disability savings plan, introduced in the 2007 budget, the government will allow a deceased person's registered retirement savings plan or registered retirement income fund to be rolled over into the RDSP of a financially dependent child or grandchild on a tax-free basis.