New Canadian Federal Budget implications on costs for you
The Federal government tabled its budget on March 29 with few tax changes and an expected change to Old Age Security (OAS).The most recent Federal Budget introduced little new tax credits but did have several technical changes that will impact tax returns in future years.
The age of eligibility for Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) will gradually increase from 65 to 67 beginning 2023, with full implementation in 2029. Anyone aged 54 or older as of March 31, 2012 will not be impacted.• Starting July 1, 2013, Canadians will be allowed to voluntarily defer their OAS benefits for up to five years. This means you do not have to start collecting at age 67 and you will receive a higher, actuarially adjusted, annual pension. This optional deferral does not include the GIS.• The government did expand the list of eligible medical expenses and added blood coagulation monitors for use by individuals who require anti-coagulation therapy such as people diagnosed with high blood pressure or hypertension. This includes disposable items such as pricking devices, lancets and test strips. The expense is eligible when prescribed by a medical practitioner and applies to expenses incurred after 2011.
The budget proposes to phase out the Overseas Employment Tax Credit over a four year period. Right now, the credit applies to 80 per cent of qualifying foreign employment income up to a maximum of $100,000. The phase out will reduce the amount to 60 per cent in 2013, 40 per cent in 2014, 20 per cent in 2015, completely eliminating the credit in 2016. However, agreements entered into prior to the 2012 Budget Day will not be subject to the phase out, but employees must have a written agreement to avoid confusion.
There is good news for cross border shoppers. The budget proposed an increase in Travellers’ Exemptions effective June 1, 2012. This exemption allows Canadian travellers to avoid additional duties and taxes on goods purchased outside the country. The new exemptions would be $200 when absent for 24 hours or more and $800 for 48 hours or more.
Finally, not everyone can escape taxation. Beginning 2013, the salary of the Governor General of Canada will be taxable in the same manner as the salary of other Canadians.
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