This is the first budget that really showed a deep awareness of the role social media plays in disseminating information in this SmartPhone world we all now inhabit. Even before the lockout ended at 4 pm, many of the early snippets came via Twitter and the hashtag #eap13 (for Economic Action Plan 2013).
What was actually tweeted in considerable volume was however relatively insubstantial, compared to some prior years.
Good riddance Labor Funds
Like most federal budgets, Economic Action Plan 2013 gave with one hand and took away with another. No sophisticated investor will mourn the loss of labor-sponsored venture capital funds: Ottawa will gradually phase out the federal tax credit in 2015, following Ontario and some other provinces in eliminating such enticements.
It’s hard to argue with stiffer measures to combat tax evasion: after all, dishonest tax payers just make life harder for the majority who comply with our admittedly byzantine tax code. But I’ll believe the tax system will be made simpler when I actually see it. (While I’m at it, let me mention that the new April issue of MoneySense just hitting mailboxes and the newsstands contains a 4-page last-minute tax-filing-tips spread compiled by Deputy Editor Sarah Efron, with the assistance of our tax columnist and prolific tweeter Evelyn Jacks.)
A family affair
The Tories threw a bone to seniors by providing tax relief for senior home care services and, continuing the family theme, introduced an enhanced adoption tax credit to provide some financial relief for adoptive parents. And as telegraphed in pre-budget leaks, parents will get some tariff relief on baby clothing and athletic equipment, thereby narrowing the egregious gap between American and Canadian retail prices of such goods.
No safety box deduction? Oh no!
The loss of tax deductibility of safety deposit boxes is a tiny loss and at this stage of the game few expected any significant improvements to the retirement and pension regime: no changes to RRSP contribution rules that I could see in the early coverage and we’d already enjoyed a hike in TFSA contributions to $5,500. We await the balanced budgets of 2015 and beyond for TFSA room to jump to $10,000 a year per person.
While the TFSA has been described as a sop to the wealthy, it’s also a boon to both low-income seniors and young people just entering the workforce who have little or no earned income to accumulate in an RRSP. In fact, Ottawa seems to be moving to making it even harder for so-called High Net Worth families to shelter their high incomes.
As Evelyn Jacks tweeted, small-business dividends are going to lose some of their advantages and investors will see tax increases on non-eligible dividends paid after 2013.
Training and retraining incentives welcome
But there will be no surplus funds to invest if you don’t have an income to start with. Too many young people are unemployed and we can’t forget older workers who are in similar circumstances or barely getting by because they’re significantly underemployed. It’s particularly hard for the latter to land well-paid salaried jobs with all the benefits typically offered by large corporations. Hopefully some of the Budget’s new measures will make it easier for this group to land jobs or at least contracts with smaller companies, or motivate them to strike out on their own with new entrepreneurial ventures.
As the parent of a 21-year old about to graduate from university, it’s hard not to be supportive of the new Canada Job Grant. I know how hard it is for young people to get a first step on the job ladder. There’s always been a mismatch between what young students choose to study at school and the skills employers actually value. Hopefully this gap will be closed now that the feds will provide up to $5,000 per person to enhance such skills: to be matched by provinces and employers. Training will be available at community colleges, career colleges, polytechnics and even union training halls.
Small Business hiring credit
The government also added $225 million to expand and extend the temporary Hiring Credit for Small Business. Small business owners will also welcome the rise in the capital gains deduction to $800,000 starting in 2014, after which it will be indexed to inflation. An accelerated capital cost allowance for manufacturers investing in new machinery and equipment is also welcome.
It’s good to see the Government encourage the young to get in the habit of giving to charity via the new (and temporary) First Time Donor’s Super Credit, which adds a 25% tax credit for the first $1,000 of cash donations to charity: on top of the standard donation credit of 15% of the first $200 and 29% beyond that level.
To close in the spirit of #EAP13, I invite you to tweet or retweet this blog, post it on your Facebook timeline and/or alert your Linked In network to its existence.