My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Tuesday, March 22, 2011

2011 Federal Budget- "Yawn"- What Should have been Considered

The Minister of Finance, Jim Flaherty, today presented the Federal Budget. For those who wish to read my firm’s (Cunningham LLP) summary of the 2011 budget, please click the preceding link.

In order that there is no confusion, given the link to my firm above, the following are my comments and views and they do not necessarily reflect those of my firm.

In my opinion, this was a nothing budget, with piddling income tax credits and an over abundance of anti-avoidance measures. Most likely given the political climate, much of what was proposed today may never see the light of day. I will comment on a couple items of interest, but I do not feel like rehashing this budget; if a rehash is what you desire, there are multiple media outlets where you can read such.

There were only two items I found of interest and that is because I am a tax accountant. I would suggest, most readers will not be intrigued by either of these two items.

1. The proposal to restrict the donation of flow-through shares from the exemption from capital gains tax is interesting to me, since it has been part of the "packaging" by those who sell these investments; buy the flow-through, get a 100% write-off, then either sell the shares to utilize prior capital losses or donate the shares and obtain a donation.

2. The proposal to eliminate the partnership deferral will impact certain clients of mine. Often a partnership would be established with say a May 31st year end, while the corporate partner(s) would have say an April 30th year end. So, for example, the partnerships May 31, 2010 income would not be taxed and picked up by the corporate partners until their April 30, 2011 year-end, resulting in a deferral of almost a year. This proposed change is similar to the phase-out several years ago of the tax deferral for those of you who were self-employed with off-calender year-ends.

So, what do I think middle and higher income tax bracket taxpayers and entrepreneurs who own their own private corporations would have liked to have seen in today's budget?

How about any of the following: 
  • Allowing child care expenses to be deducted by either parent (currently only deductible by the lower wage earner)
  • Expanding the $750,000 capital gains exemption to include the sale of assets where greater than 90% of the business is sold (many purchasers will not purchase shares for liability reasons and thus, many small business owners cannot access the $750,000 exemption)
  • Providing a second $750,000 capital gains exemption for any business owner who sells one business and starts a second and at the time of the sale of the second business has a minimum of say 20 employees
  • Increase in the small business deduction limit to $600,000 (currently $500,000), or a reduction in the corporate tax rate on the first $500,000 of taxable income to encourage job creation
  • Changes to the minimum RRIF withdrawal rules
  • An increase in the RRSP contribution limit
  • An increase in the TFSA contribution limit
  • Reduction in personal taxes rates
  • And going for the gusto, a $100,000 exemption in addition to the principal residence exemption to be applied against the capital gains of second properties, be it your city home or cottage
And, yes, I am seeing a doctor for my delusional thoughts :)

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

2 comments:

  1. Brilliant suggestions.

    I would also love it if they closed lots of tax loopholes and exceptions, and used the extra taxes thus collected to reduce the rate everyone else pays.

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  2. Anon, wow what a common name on this blog, funny I never met anyone named Anon in my day to to day life. Can I infer the blogger is brilliant if the suggestions are brilliant :)

    ReplyDelete