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.

Thursday, March 29, 2012

2012 Federal Budget

The Minister of Finance, Jim Flaherty, today presented the 2012 Federal Budget. As with Tuesday's Ontario Budget, there are no personal income tax rate changes. However, there is a significant change to the age of eligibility for Old Age Security ("OAS") which will be pushed back to age 67 from age 65 for anyone who has not yet reached the age of 54 as of March 31, 2012.

There are no corporate income tax rate changes, however, there are various measures related to the Scientific Research and Development Program ("R&D") and taxpayer compliance.

Other than the OAS change for individuals and the R&D changes for corporations, I don't think there is much to get most people excited about in the budget. Thus, I am going to take the lazy way out, and link to my firm Cunningham LLP's budget summary (which I helped write) for those who want details of the budget.

As someone who is just below the OAS age cut-off, I feel like my year of birth, has been a little unlucky. It was bad enough that I was born too late for Woodstock and got stuck with Disco, now I get screwed on the OAS cut-off :).

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.

7 comments:

  1. "As with Tuesday's Ontario Budget, there are no personal income tax rate changes."

    Alas, you're quite right. Not even a boost to the TFSA (the only Conservative notion that had some appeal to me).

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  2. @Tom

    I recall that the Conservative platform was that they would raise the TFSA amount once the budget was balanced ... so there may be some hope for the future.

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  3. Yes yes, but you aren't really being screwed on the OAS, are you? Presumably your, and my, income in retirement will be high enough that the entire OAS amount will be clawed back. So, what's the problem with the change to 67? Sorry. But I really don't understand the hoopla surrounding the change - if you are at all responsible with your money, you won't be getting OAS anyways. And, secondly, even if you were to get the full amount - it's only about $6000 a year. In the grand scheme of things, and even as that amount rises with inflation, it's not very much at all. Better off saving properly and not relying on it - and not complaining about it! Cheers.

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    1. JMN, while I think your comment is directed at me, that is a very narrow view. The majority of Canadians require their OAS and many only have very small clawbacks if any, so the 2 years and $12k is very meaningful.

      In my case, while I would suspect between me and my wife we will have a clawback of some sort, I hope but don't expect that we will have two full OAS clawbacks.

      I don’t know about your retirement, but mine after spending around ten years paying out various older partners is now dependent upon my younger partners doing the same for me, which is subject to many vagaries, interest rates rising at some point, my kids not making University a lifetime career and a market that is not flat for another ten years.

      I also try to live while able, so I am not necessarily saving to my maximum, since my philosphy is keep one eye on retirment, but live life to the fullest while you are able and still standing.

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    2. I'm not convinced. Today, it is easy to pay more than 6000$ per month for a care home in Canada's big cities. So, the OAS (in full) does not even cover one month of this. I realize there are other options for care - but I am not convinced that the amount of the OAS justifies the enormous amount of press it has generated in the mainstream media. I suppose I wonder whether many of the Canadians doing the complaining actually realize (1) how little the amount is, and (2) that there is a clawback. Clearly you are aware of both - but you are bearing the brunt of my complaining since I find your blog to be one of the few financial/tax blogs worth reading!

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    3. JMN, since you are a connoisseur of fine blogs, what can I say to you:)

      But seriously, my clients often have me prepare the tax returns for their parents. While most of my clients will never see their OAS, you would be surprised to see how many of their parents, retired people live off of very little money and $6k is 10-15% of their retirement income, so a significant amount to them.

      Anyways, back to prearing tax returns, I understand where you are coming from, just will agree to disagree on some aspects.

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  4. " But seriously, my clients often have me prepare the tax returns for their parents. While most of my clients will never see their OAS, you would be surprised to see how many of their parents, retired people live off of very little money and $6k is 10-15% of their retirement income, so a significant amount to them."

    Very loyal ,hardworking ( and prudent with saving money)individuals were greatly affected by business downsizing/closures and stockmarket actions during the past 20 years

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