PERSONAL TAX
Canada Child Tax Benefit (CCTB) and Universal Child Care Benefit (UCCB) These amounts are currently received by one supporting parent. The budget proposes that, in the case of separated parents who share custody, they will be able to each receive half of these payments. This change becomes effective July 2011.
UCCB is currently included in the income of the lower-income spouse or common-law partner. When it is a single parent the benefit is included in their income for tax purposes. The budget proposes giving the single parent the option to include the benefit in the income of the child. This will be effective for 2010.
Medical expense Changes will no longer allow cosmetic medical or dental procedures in calculating the medical expenses unless there is a clinical medical or reconstructive purpose. This includes liposuction, hair replacement, botox and teeth whitening and is effective for procedures after March 4, 2010.
RRSP and RDSP Currently RRSPs, RRIFs and RPPs can be transferred, tax-free, to a spouse, common-law partner or dependent child or grandchild. The budget will extend the tax-free rollover to an RDSP up to the lifetime maximum of $200,000 effective for a taxpayer who dies after March 4, 2010. There will also be a transitional rule allowing the executors to elect a transfer for anyone who has passed away after 2007 and before budget date.
Contributions to an RDSP can result in annual government grants of up to $3,500 and bonds of up to $1,000 for moderate-income families. However, currently the grants and bonds are lost if contributions are not made in the year. The changes will allow the plan to receive the grants and/or bonds in future years by tracking the carry forward of contribution amounts for up to 10 years. This change is effective for 2011.
Scholarship Exemptions and Education Tax Credits Grants, fellowships and bursaries are generally completely tax exempt for any post-secondary program. The new rules will restrict the exemption for post-doctoral programs to the amount paid for tuition with the exception of a student who qualifies for the Disability Tax Credit. The full exemption will continue for any program resulting in a college diploma or bachelor, masters or doctoral degrees. This is effective for 2010.
Employee Stock Options Currently the options are taxed as an employment benefit based on the difference between the fair market value at the time the option is exercised and the amount paid for the security by the employee and generally the employee gets a stock option deduction of half of the employment benefit. If the company gives the employee the option to cash-out, (receive a cash payment) the current treatment allows the employee to take the stock option deduction and the company to get a full deduction for the cash payment, resulting in a double deduction. Changes will allow the employee to take the stock option deduction only if the employer elects not to deduct the cash payment. This will be effective March 4, 2010.
There is also a stock option tax deferral available for employees who receive public company stock options allowing them to request a deferral on the taxation of the options up to an annual maximum deferral of $100,000 per year of benefit that will not be taxed until the security is sold by the employee. Currently, if the security value drops before the employee sells the shares resulting in reduced cash, it may leave the employee in the positions of less cash proceeds than the tax on the benefit. The budget repeals the deferral election effective March 4, 2010.
A special election will be allowed to taxpayers who have previously filed the tax deferral. This will limit the tax liability on the benefit to the amount of the liability on the sale of the securities. If the securities were sold before 2010 then the election can be filed no later than the due date for the 2010 tax return, generally April 30, 2011. If the shares are not sold the taxpayer has until December 31, 2014 to sell and file the election by April 30, 2015.
US Social Security Currently 85% of US Social Security benefits received by Canadian taxpayers is taxable in Canada. The budget reinstates the previous 50% inclusion but only for those who were receiving the benefits before 1996 including spouses receiving survivor benefits. This is effective for 2010.
Mineral Exploration Tax Credit The flow through program for mining exploration has been extended another year until March 31, 2011.
back to top
|
