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