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2010 Federal Budget Highlights

For a complete read head to 2010 federal budget highlights

Measures concerning businesses

  • The budget proposes to expand Class 43.2 (specified clean energy generation and conservation equipment – declining balance capital cost allowance (CCA) rate of 50%) to include: (a) heat recovery equipment used in a broader range of applications; and (b) distribution equipment used in district energy systems that rely primarily on ground source heat pumps, active solar systems or heat recovery equipment. These measures will apply to eligible assets acquired on or after March 4, 2010 that have not been used or acquired for use before that date.
  • The budget proposes that satellite and cable set-top boxes that are acquired after March 4, 2010 and that have neither been used nor acquired for use before March 5, 2010 be eligible for a declining balance CCA rate of 40%.
  • The budget proposes that the definition of taxable Canadian property be amended to exclude shares of corporations, and certain other interests, that do not derive their value principally from real or immovable property situated in Canada, Canadian resource property or timber resource property (subject to the 60 month rule). This measure will eliminate section 116 compliance obligations for these types of properties and will bring Canada’s domestic tax rules more in line with our tax treaties and the tax laws of major trading parties. This measure will apply in determining after March 4, 2010 whether a property is taxable Canadian property of a taxpayer.

Measures concerning individuals

  • The existing rules restrict the receipt of the Canada Child Tax Benefit and the Universal Child Care Benefit (UCCB) to only one eligible individual in respect of a qualified dependant each month. This restriction also applies to the child component of the GST/HST credit payable each quarter. Effective for benefits payable starting in July 2011, it is proposed that two eligible individuals can share these benefits in respect of a child, if the recipients would be eligible to receive amounts under the existing shared eligibility policy of the CRA. This policy applies when a child lives more or less equally with two individuals who live separately.
  • In two-parent families, the UCCB must be included in the income of the lower income spouse or common-law partner, while in a single parent family the UCCB is generally included in the single parent’s income. To alleviate the inequity of a single parent potentially paying more tax on UCCB amounts than a couple with one income earner, it is proposed that effective in 2010, a single parent will have the option of including the UCCB amounts in the parent’s income or the income of the dependant.
  • It is proposed that medical expenses incurred after March 4, 2010 for purely cosmetic procedures be ineligible for the Medical Expense Tax Credit.
  • Under certain conditions, an employee of a publicly-traded company who acquires shares under a stock option agreement may elect to defer the recognition of the employment benefit until the disposition of the optioned securities. The special election is also available for securities disposed of before 2010.
  • It is proposed that the inclusion rate for US Social Security benefits received after 2009 be reduced from 85% to 50% for Canadian residents who have been receiving US Social Security benefits since before January 1, 1996.

– A lot of interesting changes with this budget including two eligible individuals being able to share child tax benefits.  This is a big step in the direction of recognizing not only “split families” but fathers being as important as mothers in the raising of children.

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