Canadian families are bound to be confused.
Finance Minister Jim Flaherty’s federal budget vows to slash the deficit but there are few details on how the conservative government plans to do so.
With a budget firmly focused on businesses, large and small, there was very little for most families to rejoice about except for the raising of the basic personal tax exemption and the promise to improve skills training for young Canadians.
Higher child tax benefits have been offered but only to families that qualify.
“The long and short of it is there were no major broad-based tax incentives for the majority of Canadians. It was more tinkering to fill a few voids with regard to the tax regulations,” said Wilmot George, the director of tax and estate planning at Mackenzie Financial Services Inc. “Some families would benefit, but these aren’t sweeping benefits for everyone.”
According to George, a notable amendment is the way in which child tax credits and benefits are applied to separated parents. Under the new budget, separated parents who share custody of their children will have a new option available to them.
“What the budget does is allow the total amount to be split between the two parents. This gives the separated couple more flexibility,” George explained to Advisor.ca from Ottawa.
The budget also permits single parents to tax the benefits to their children, whereas earlier only dual-parent families had the option of taxing that income to the lower income spouse.
“The child being in a lower tax bracket equalizes the situation that would be applicable to dual-parent families versus a single-parent family,” he said.
Families who don’t fall into these categories can take solace from the fact that the basic personal income-tax exemption will rise to $10,382.
“I didn’t see or hear a whole lot of anything except the benefit of no income tax increases at this point. It all seemed very vague,” said Stephanie Holmes-Winton, a Halifax-based financial advisor who focuses on debt management.
“It seems like the budget doesn’t even affect us,” said Laura Gallo-Pereira, a 32-year-old mother and claims/administrative assistant in Toronto. “They are really doing nothing for us.”
A mother of an 11-month-old boy, Gallo-Pereira was hoping the government would do more for her family to help them make ends meet.
“We were expecting something that would benefit our child and obviously, that is out the window,” she said. “The tax benefits they give single parents should have applied to couples too. Have you seen the price of diapers, formula and everything else, nowadays? It is ridiculously insane.”
The Harper government, however, is promising new employment opportunities for young Canadians by increasing support for internships. The government support will come to the tune of $108 million over three years with $10 million going to the Canadian Youth Business Foundation in support of its work with Canada’s young entrepreneurs.
Holmes-Winton appreciates the investment in Canada’s youth but wishes there was more to help families with their core concerns.
“They’re going to be left wondering: what the heck does this all mean to me? Because it isn’t very clear even to other professionals I’ve talked with today,” said Holmes-Winton. “They are going to cut spending. Where? We aren’t going to tell you that part. So, I think the average person is just going to be confused
Gallo-Pereira’s husband, Joe Pereira, a welder by trade, couldn’t agree more.
“The only good thing about the budget is they didn’t raise our taxes,” he said.
(03/04/10)
