This year’s federal budget in-cludes changes and improve-ments, but overall it is consistent with previous years’ plans. The following are highlights you may want to know about:
- Change to eligible capital property rules
Big changes could be coming down the pipe for farmers.
The purchase of eligible capital expenditures (ECE) such as water rights and quota is now tracked and reported differently than other assets.
The budget proposed a possible change with a move toward treating the purchase of ECE more like other assets. The government plans to release draft legislation on the topic followed by a public consultation process.
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- High-speed for small towns
The budget included an allocation of $305 million to be spent developing high-speed rural broadband. This is intended to help equalize internet access across Canada because many communities are not yet reliably connected.
- Help for drought or flooded farmers
Farmers who dispose of breeding livestock because of drought, flood or excess moisture are allowed to defer up to 90 percent of their sales proceeds until the following year.
The budget now also allows farmers in these conditions to defer sales of bees and all types of horses older than 12 months.
- GST credit simplicity
You no longer need to apply for the GST credit. Instead, filing your tax return will trigger the application automatically.
- Rewarding rescue volunteers
The government has extended the volunteer firefighter’s credit by introducing a search and rescue volunteer credit. At least 200 hours of volunteer time are needed to qualify for this $3,000 credit.
- The downside to lighting up
This is an upside for your health, perhaps, but a downside for your wallet if you are a smoker. Tobacco prices will be going up, increasing by about $4 per package. If your New Year’s resolution was to quit smoking, this may give you the extra incentive you needed to keep it up.
- Reporting foreign income still required
Foreign income reporting rules have not changed, so it is important to talk to an accountant if you own foreign property valued at more than $100,000.
Your vacation home or cottage in the United States is not a problem, but you may need to compile information on a T1135 form for the government if you own rental property across the border or have non-Canadian financial investments.
Be sure to talk to an accountant to determine if you are reporting all of your foreign income on the right form.
- Missing slips still a scary mistake
There continues to be a 20 percent tax penalty on missing tax slips. They are one of the most common problems to arise during tax time, and the costs for this mistake can add up quickly. Unfortunately, a missing slip is often not discovered until your taxes are filed and complete, and the penalty is due.
To avoid this, check your tax return and compare last year’s slips to slips you collected this year to determine if you are missing something.
Ask your employer, investment manager or bank if and how many slips you should be expecting.
If you think you are missing a slip, you can call the Canada Revenue Agency to find out what was filed.
Get an accountant to guide you through the tax-time process.
The government has been succeeding on its mission to balance the budget. The economy performed better than expected in 2013, and the 2014 budget brings with it solid expectations that the budget will be balanced in 2015.
The government took a conservative approach to its finance planning, choosing to focus on job creation, which would in turn create more tax revenue.
It also focused on increased collection by closing tax loopholes.
This increased attention on collection means it is a good idea to be prepared for a personal tax audit by ensuring you have supporting documentation for any of your government forms, filings or tax returns.
