Federal Budget 2011-2012
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With the budget he tabled on June 6, Finance Minister Jim Flaherty picked up where he left off last March. In politics, it’s often said, a few months is an eternity... But it ain’t necessarily so when it comes to public finance!

The Finance Minister makes no bones about it: instead of a fresh budget planning exercise, his new budget is essentially the same as the one that failed to be adopted last March, with the odd addition (notably the elimination of the political party allowance), none of which directly impact the taxation of individuals.

So the question is: where were we, exactly, last March? We were coming to an important realization: as observers were quick to point out, fiscal 2011-2012 will mark the end of the expansionist measures brought forward in the past two years to stimulate the Canadian economy in a recessionary environment. In fact, three main conclusions stand out today:

the stimulus period is effectively over and we are moving into public finance recovery mode: while the previous budgets included stimulus spending in the area of $20 billion, this one is limited to about $2 billion ;
the Government believes that the recovery of public finances, i.e. the return to a balanced budget, can be achieved by 2014-2015 (a year earlier than in the March budget) with no new taxes - and without even raising the GST; even provincial transfer payments will remain at their current levels ;

on the other hand, government operations, departments and services are facing a "Strategic and Operating Review" in order to find substantial savings there; as well, numerous tax loopholes used by some businesses will be closed, which will also help to replenish the government coffers. It should be noted, however, that the coming budget year will be one of studies and planning: the real cuts will come later, to be announced in the 2012-2013 budget.

Everything for everyone

Beyond these broad strokes, the budget mainly introduces a series of targeted measures aimed not at taxpayers as a group, but rather at many specific groups of taxpayers or economic stakeholders. These include:

•  parents with artistic children ;
•  low-income seniors ;
•  family caregivers ;
•  physicians in remote areas ;
•  volunteer firefighters ;
•  households wishing to renovate to improve energy efficiency ;
•  students, especially those studying abroad ;
•  the mining sector ;
•  the forestry sector ;
•  the agricultural sector ;
•  small craft harbours ;
•  the renewable energy sector ;
•  excellence research chairs ;
•  First Nations ;
•  etc.

Note, as well, that the Government has also announced a plan to create a new pooled registered pension plan to offset an imminent pension crisis, along with minor changes to RESPs and RRSPs, and several other isolated measures.

Finally, if you own a business, be aware that the accelerated capital cost allowance program for the purchase of machinery and equipment has been extended by two years.

To put things in perspective, you are one of the big winners in this budget if you have a child who wants to take piano or violin lessons, if you are a low-income senior, if you are a family caregiver or if you are planning to upgrade the insulation in your home. However, we are talking about either quite minimal amounts (no more than $100 in tax savings, for example, for your future Mozart’s arts training), or the improvement or extension of existing programs. That said, there are no "small amounts" when it comes to personal finance: even a small amount can make a big difference to the people involved. If you fall into one of the categories listed above, visit the Budget 2011 Web site - and talk with your financial services professional, of course - to find out which details apply to you.

In conclusion, what underlies this budget is essentially good news - specifically that the recession, relatively mild as it was for Canadians, is really over. But gone too, of course, is the time of generous support measures! So this is a transition budget that will take us from the past recovery efforts to the austerity - especially in the public service - promised for next year.