News

The federal Conservatives must have been channelling Walt Disney when they wrote this budget.

Canadian taxpayers have never seen anything as slickly packaged and family friendly in the extreme. There are no dramatics here, just an exercise in pleasing the crowd with some calculated plot twists.

Have any kids? You'll save up to $310 apiece starting this year thanks to the new child-tax credit. Have a registered education savings plan set up to help pay for a child's college or university tuition? You're now in line to receive an extra $100 a year in grant money from Ottawa, and there are no more annual contribution limits. Families with a stay-at-home parent get a small tax benefit of their own, while parents of disabled children get their own version of the RESP.

There was no capital gains tax deferral in the budget -- it wouldn't do much for families, especially ones that aren't rich. There were no broad-based income tax cuts, either. They're hard for people to track, and the experience of recent budgets shows they rarely save much more than a couple of hundred dollars.

Instead, the budget offers a few marquee attractions rated F for family. The centrepiece is the new child-tax credit, which will trim $620 off the annual tax bill of a family with an income of $40,000 or more and two children under 18. By the tax-savings standards of recent budgets, that's significant. It's all the more tangible for parents of children under 6, who are already benefiting from the Universal Child Care Benefit of $100 a month that was introduced in the 2006 budget.

RESPs are important to families struggling to afford the cost of a postsecondary education, so the government did something splashy with those in the budget. The annual $4,000 contribution limit for RESPs is history, and the lifetime contribution limit rises to $50,000 from $42,000.

People who scramble to keep up with big mortgages while making contributions to registered retirement saving plans probably don't have the cash to make full use of the new RESP rules. But they'll still be able to benefit from the budget through an increase in the federal grant money that Ottawa matches against RESP contributions by individuals. The annual amount of the Canada Education Savings Grant rises to $500 a year from $400. The grant provides 20 cents for every dollar you put in an RESP, so you'd need to contribute $2,500, up from $2,000, to get as much grant money as possible. For parents of disabled children, there's the proposed new registered disability savings plan, or RDSP, which closely resembles the RESP. There's a lifetime $200,000 contribution limit on these plans, which benefit from a very generous federal grant that offers up to $3 for every $1 contributed.

Another family-friendly budget measure eliminates the so-called marriage penalty, which refers to the fact that one-earner families didn't get quite the same level of tax relief as two-earner families. To remedy this, tax credits for spouses with little or no income will be increased in such a way as to provide up to $209 in family-tax savings. Single parents and people caring for a dependent will also benefit.

Straying a bit from the family theme, the budget offers up a change that will be welcomed by seniors who remain in the work force and don't want to start drawing off their savings. They'll be able to convert their RRSPs into registered retirement income funds, or RRIFs, at age 71 instead of the current 69. The conversion age is a big deal because RRIFs require a minimum amount to be withdrawn every year, whereas RRSPs do not.

Older Canadians who remain in the work force will also benefit from a proposal for phased retirement that would allow people to simultaneously draw from a pension plan while also accruing benefits in the same plan as an employee.

The people most likely to call this Disney budget Mickey Mouse are those who were anticipating the government living up to its election promise to introduce a capital gains tax deferral. As advertised, the deferral would have let you sell stocks, bonds and properties like cottages without paying taxes on your profits if you reinvested the funds in fairly short order.

The only mention of capital gains in the budget was an increase in the lifetime capital gains exemption for small-business owners, farmers and fishermen to $750,000 from $500,000.

Also unlikely to enjoy this budget are people who invested in income trusts. The federal government introduced a new tax on income trusts last Oct. 31, and, while it won't kick in until 2011, it has driven down the price of most income trusts. Any lingering hope that the Conservatives would soften their trust crackdown should now be gone. Even in a Disney budget, not everything ends happily.

rcarrick@globeandmail.com