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Elements Of Canadian Budget Pass Legislative Hurdle

July 2011 - Tax & Private Client. Legal Developments by Hassans.

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A key part of Canada's Budget, aimed at assisting senior citizens, has passed through parliament, resulting in the restructuring of a series of benefits, and the introduction of tax credit and relief measures.

The Supporting Vulnerable Seniors and Strengthening Canada's Economy Act, introduced on June 14, received royal assent on June 26. The Act forms part of Finance Minister Jim Flaherty's Budget, "the Next Phase of Canada's Economic Action Plan: A Low-Tax Plan for Jobs and Growth", which was re-tabled on June 6, following a general election. The Act also provides a financial boost to various sectors of the economy, and offers assistance to students and those with disabilities.

The main provisions are as follows:

  • The Guaranteed Income Supplement will be enhanced for those seniors who may be at risk of experiencing financial difficulties. The government is to provide a new top-up benefit, worth up to CAD600 per year for single seniors and CAD840 per year for couples. It will, according to government estimates, benefit more than 680,000 seniors across Canada;
  • Beneficiaries of Registered Disability Savings Plans who have shortened life expectancies will be able to make annual withdrawals without triggering the 10-year repayment rule, subject to specified limits and certain conditions;
  • Individuals will be able to appeal, in every case, a determination concerning their eligibility for the Disability Tax Credit;
  • The temporary Total Transfer Protection programme will be extended to 2011/12, with the aim of supporting front-line delivery of health care and social programs in the provinces, with CAD1bn set aside;
  • CAD20m will go towards helping the Canadian Youth Business Foundation, encouraging young entrepreneurs;
  • Federal assistance for part-time students will be increased, with the in-study interest rate for part-time students to be reduced to zero, bringing them in line with full-time students;
  • General sales tax/harmonized sales tax relief will be provided for Royal Canadian Legion purchases of Remembrance Day poppies and wreaths;
  • CAD65m will be given to Genome Canada to launch a new competition in the area of human health, and sustain the operating costs of Genome Canada and Genome Centres; and
  • The government's oversight of the mortgage insurance industry will be strengthened.

Flaherty welcomed the legislation's passage, saying: With a strong mandate from Canadians, the government of Canada has acted decisively to ensure this important budget legislation is passed on a timely basis. As a result, Canada's most vulnerable seniors can count on a top-up to their Guaranteed Income Supplement effective July 1, 2011, as promised.

While Canada has seen over 560,000 net new jobs created since July, 2009 and seven straight quarters of economic growth, too many Canadians are still looking for work and the global economic recovery remains fragile. The swift passage of the Supporting Vulnerable Seniors and Strengthening Canada's Economy Act and the next Phase of Canada's Economic Action Plan will support a sustainable private-sector driven recovery and long-term economic growth", Flaherty added.

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