Life Can Be Taxing  

What's in the new budget?


On June 6, 2011, Finance Minister Jim Flaherty presented the 2011 Federal Budget. This budget was essentially the same budget that was presented in March but never passed due to the dissolution of Parliament. So what’s in this new budget for you, your family, and your business? Here are some of the highlights.

For business a one-time Employment Insurance (EI) Premiums Credit was introduced. Termed the Hiring Credit for Small Business (“HCSB”) this one-time credit of up to $1,000 is based on the increase in an employer's employment insurance (EI) premiums paid for 2011 over those paid for 2010. Businesses whose total employer portion of EI premiums paid for 2010 was $10,000 or less are eligible for the credit if their premiums increase in 2011. The credit is calculated as the difference between the 2010 and 2011 premiums up to a maximum of $1,000. The credit is automatically calculated when an eligible employer's 2011 T4 information return is filed.

While the HCSB is designed to help small business, there are measures designed to help you and your family also. Similar to the Child Fitness Tax credit already available, the 2011 budget proposes to create a Child Art Tax Credit. The credit is available to parents of a child who is under 16 years of age at the beginning of the year who is enrolled in an eligible artistic, cultural, recreational or developmental activity. The amount of the credit will be 15% of the qualifying expenses (up to $500). The credit can be claimed by either parent or shared by both. The types of activities and programs that qualify are varied. The Canada Revenue Agency has provided some guidance on their website as to what will and will not qualify. Visit their website at http://www.cra-arc.gc.ca/gncy/bdgt/2011/qa01-eng.html to learn more. Oh, and don’t forget the credit will apply beginning in 2011 so start collecting those receipts now.

There is also relief for those taking professional examinations and examinations to maintain or obtain certain trade certification. Previously these types of expense would not normally qualify for tax relief as part of the Tuition Tax Credit. Starting in 2011 and subsequent years, examination fees paid to an institution for examinations may be eligible for an inclusion as part of the Tuition Tax Credit. To qualify, the examination must be required to obtain a professional status recognized by federal or provincial statute, or to be licensed or certified as a tradesperson where that status, license or certification allows the person to practice the profession or trade in Canada. Not only will the examination fee be eligible, but so too will ancillary fees paid to an institution in respect of the examination (for example, the cost of examination materials used during the examination, and certain prerequisite study materials). Eligible ancillary fees will not include the cost for travel, parking, and equipment associated with the exam.

These credits are just three of many changes announced. There are numerous other changes that may apply to you or your business. To view a summary of these changes visit Canada Revenue Agency’s website at http://www.cra-arc.gc.ca/gncy/bdgt/2011/menu-eng.html. If you have questions about this or any other accounting or tax-related issues give me a call.    

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Andrew Pitre is a Chartered Accountant with K. Hecht & Associates Inc. Andrew specializes in the area of accounting and tax for individuals and owner managed businesses. His areas of practice include year-end notice to reader and review engagement reports and associated corporate tax filings. In addition, Andrew's practice includes tax planning for individuals, corporations, and trusts.

Andrew graduated from the University of Victoria in 2005 with a degree in Economics. In 2005 he began his career in public accounting and in 2008 he obtained his Chartered Accountant designation. In 2010 Andrew completed the Canadian Institute of Chartered Accountants In-Depth Tax Course.

Andrew's interests include most water sports, snowboarding, squash, and hiking. He is the current President of the Kelowna CA association and treasurer of the West Kelowna Daybreak Rotary club.

Andrew can be reached at [email protected] or www.hecht.ca.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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