The first budget from the Conservative majority government created a lot of speculation about how it would use this opportunity to shape Canada’s future.
Spending cuts and deficits were the main themes in this year’s budget, but how far did the axe really fall when slashing federal spending?
The government expects a deficit of $24.9 billion for 2012, falling to $1.3 billion by 2015. Expenditures are being constrained, which is expected to create an ongoing saving of $5.2 billion a year. Annual savings and deficit cutting will allow Canada to return to a surplus by 2015. The cost reductions include job cuts.
Read Also
Alberta crop diversification centres receive funding
$5.2 million of provincial funding pumped into crop diversity research centres
The government made it clear it would not fund the deficit through increased personal or corporate tax rates. This is good news, but where will Canadians be affected by the cuts?
Production of the penny will end this fall. It will still hold value for spending but costs 0.6 cents more to produce than its spending value. Cutting out the penny is estimated to save the government $11 million annually.
The age of eligibility for Old Age Security and Guaranteed Income Supplement will gradually increase to 67 starting in 2023. Anyone 54 or older as of March 31, 2012, will not be affected by this increase. People born on or after Feb. 1, 1962 will be eligible for OAS and GIS at age 67. People born between March 31, 1958, and Feb. 1, 1962, will be eligible for OAS sometime between 65 and 67.
Starting July 1, 2013, individuals will be allowed to defer their OAS pension for up to five years. By doing this, they will receive a higher actuarially adjusted annual pension. This could be beneficial for people who plan to continue working for several years or earn other income that could cause the OAS to be clawed back.
The government is scaling back on scientific research and experimental development tax credits. Instead, the government has decided to provide more direct support to research and development in Canada through grants and other programs.
The government is providing $1.1 billion for direct research and development support as well as provide $500 million for venture capitalist initiatives.
Research and development is be-coming more popular in the agriculture industry. The Canada Revenue Agency defines research and development as improved, technologically advanced procedures or processes.
With this broad definition, you could be involved in research and development and not even realize you would be eligible for funding.
Have you constructed a more effective attachment for machinery to make production more efficient?
Have you found a way to increase crop yields through an innovative new system?
If you think you are involved in research and development, you should consult with professionals to find out if your invention or improvement would qualify. It could mean money in your pocket.
The budget announced that the hiring tax credit of $1,000 would continue for another year. This credit was available to all small businesses that had payroll accounts in 2011.
The goal was to encourage businesses to hire more staff and support the Canadian economy. Therefore, if your average employment insurance premiums increased during 2011, you received an automatic reduction in your payroll remittances up to $1,000.
Continuing this program into 2012 is a small reprieve for business, but considering the ease in applying for and receiving the credit, it’s a great opportunity for businesses to recover some costs.
The budget contained many minor items that are proposed to gain pol-itical points.
Regardless of your political opinion on the Conservative budget, it will have an effect on all of our lives. Being familiar with budget changes and the impact on you and your family is important to ensure you benefit from the proposals.
