Federal Budget 2014

February 21, 2014

There were 8 items in the budget that may impact certain estate plans.  These are presented in point form for your review.  If you feel any of these could impact you, please give us a call and we can discuss in more detail.

On February 11, Finance Minister Jim Flaherty delivered his federal budget for 2014. Here is an overview of budget highlights that may affect your financial plan.

Testamentary trusts

  • No longer entitled to graduated tax bracket treatment. Income from investments held in testamentary trusts will be taxed after 36 months from date of death at the highest  rate.  In practice there are ways to invest that eliminates income within the trust until required by the beneficiary.  The income could then be taxed at the beneficiary’s tax rate.       Beneficiaries who qualify for the Disability Tax Credit would still receive graduated tax rates.

Estate donations

  • Greater flexibility for tax reduction when making donations through Will and estate. The donation tax credit could taken by the estate or applied to the deceased income in the year of death or previous year.


  • Amount for adoption expense tax credit increased to $15,000

Immigration trusts

  • New Canadians will no longer be able to set up these tax-friendly tools

GST qualification  

  • No need to apply; CRA will make the calculations and inform those eligible 

Amateur athlete trusts

  • Fewer restrictions for RRSP contributions

Search and rescue volunteers

  • New tax credit

Medical expense tax credit

  • Extension to include cost of preparing a treatment plan

If you would like to discuss these budget initiatives and how they may affect your financial plan, please don’t hesitate to contact us.

Chart of the Month – February 2014

The following chart out of JP Morgan’s quarterly “Guide to Markets” is an excellent example of premium returns going hand in hand with premium volatility.   The blue bars show where the S&P500 ended up in percentage gain on the year.  The red dots show the lowest point the S&P500 reached that very same year.  Notice anything interesting?

S&P 500 Declines vs Returns








Chart of the Month – S & P 500 Annual Returns vs. Declines

What’s interesting about this chart is that despite the market index declining below where it started the year in virtually every year, it finished up 26 times out of 34 years!  The lowest point the market reached that year was not correlated in any way to where the market ended that calendar year.  In other words, just because the market is down, does not mean it will stay down.

No Actually, this is really the chart of the month…

If anyone wonders if the world is getting better or worse , you need to consider this chart:

World Poverty Rate