Canadian Budget Enters Legislative Process

by Mike Godfrey, Tax-News.com, London

16 June 2011

As part of the Budget process, the Canadian Finance Minister Jim Flaherty has introduced legislation which will implement key elements of the programme, and follows on from a ways and means motion, which outlined many of the measures later included in the Act.

The Supporting Vulnerable Seniors and Strengthening Canada’s Economy Act, introduced on June 14, restructures key benefits and offers a tax credit and relief measures.

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 (USD608) 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.
• The government's oversight of the mortgage insurance industry will be strengthened.

Commenting on the legislation, Jim Flaherty said: “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. That is why we need to stay the course with our prudent, low-tax plan with the Supporting Vulnerable Seniors and Strengthening Canada’s Economy Act".

He added: "“Canada’s most vulnerable seniors are counting on the GIS top-up to come into effect on July 1, 2011 as promised. This can only happen with the swift passage of the Supporting Vulnerable Seniors and Strengthening Canada’s Economy Act".

The Notice of Ways and Means Motion implementing most of the measures proposed in the 2011 Budget, tabled last week, essentially foreshadowed this Act, providing for many of the proposals outlined above. It also outlined the government's intention to allow the sharing of information obtained under the Excise Act, 2001 and the Excise Tax Act with countries or jurisdictions with which Canada has entered into a tax information exchange agreement.

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