It’s that time of year when the wish lists come out – and no, I’m not talking about kids and their letters to Santa. Rather, I’m referring to the pre-Budget submissions made to the House of Commons Standing Committee on Finance.
In reality, these were actually due back in August, but with the handful of goodies announced in the Fall Economic Statement in November, it seems like a good time to look at the suggestions the government had to work from. Given the razor-thin remaining surplus, there may not be much more in the Budget, but it’s fun to speculate.
I won’t pretend that I went through all the 400+ submissions, but I did scope out a broad array of those focused on individual tax and income issues. And though I share a particular point, premise or perspective of a few organizations below, almost all of these items were offered by multiple organizations or individuals.
Doubling TFSA room – More than a few asked for the follow-through of the Conservative party’s 2011 election promise to double TFSA room. Whether that means $10,000 (based on the $5,000 level in 2011) or $11,000, this is probably the most certain item to make it into the Budget. Some even suggest that an increase in RRSP room would be a fitting complement.
Latest RRSP contribution age – Owing to seniors continuing participation in the workforce and ongoing improvements to life expectancy, a number of submissions are looking for the RRSP contribution age limit to be lifted, perhaps to age 75.
RRIF minimums – In concert with increased RRSP contribution age, a recurring theme over the last half decade or so has been to urge for an increase in the mandatory minimum withdrawal age beyond the current age 71, again perhaps to 75.
Pension income splitting – The age 65 requirement for RRIF income should be eliminated in order to put senior spouse couples on an equal footing, whether receiving RRIF or RPP income.
Vulnerable seniors – Numerous contributors noted the plight of low income seniors, especially women. Canadian Association of Retired Persons suggests creating an ‘equivalent to spousal allowance’ for single seniors in need, and making the Caregiver Tax Credit refundable.
Payroll taxes and group RRSPs – Against the backdrop of the implementation of Pooled Registered Pension Plans (PRPPs), the Investment Funds Institute of Canada requests that Group RRSPs be placed on a level footing with other workplace savings plans. Specifically, employer contributions should be exempt from payroll tax, CPP and EI.
Increase the CPP death benefit – The maximum Canada Pension Plan death benefit was reduced from $3,580 to $2,500 in 1998, and remains there today. Based on this being designed for end of life needs, the Funeral Services Association of Canada asks that the amount be reset to $3,440 based on interim inflation, and be annually indexed hereafter.
Stretch charitable tax credit – The Association of Fundraising Professionals supports the augmentation of the charitable tax credit by 10% for donations that exceed a donor’s previous highest annual giving level. In order to maintain focus on the middle income population, the eligible donation amount would be capped at $10,000.
Credit card fees and charities – Imagine Canada advocates for federal regulatory action to limit or eliminate fees on donations made by credit card. In support, it cites precedents from Australia and the European Union, and the current Senate study of Bill S-202 that proposes to regulate and eliminate such fees for registered charities.
Donations by Will – Recent amendments provide flexibility for estate-based charitable donations, but impose a rigid deadline of 36 months after death to qualify. The Canadian Association of Gift Planners recommends that tax authorities be given administrative latitude to extend the time period in appropriate circumstances, such as illiquid assets or litigation.
Extend the deemed disposition rule for trusts – Law firm Davies Ward Phillips & Vineberg LLP points out that the 21-year deemed disposition rule introduced in 1971 was arbitrary, and is otherwise outdated anyway. It is suggested that the period be extended to 50 years, counting from the death of the settlor or contributor.
Capital gains rollover – The Investment Industry Association of Canada proposes a rollover provision for capital gains, contingent on reinvestment of sale proceeds into common shares of small listed Canadian companies within six months.
Adjust personal income tax thresholds – As a means to attract talented immigrants, Deloitte suggests increasing the threshold at which top tax rates apply, implemented in stages over 5-10 years once the Budget is balanced.
Simplified tax system – The Chartered Professional Accountants Canada would like to see a thorough review of the tax system, perhaps on the scale of the Carter Commission in 1966. In the meanwhile, it advocates a reduction in personal tax rates once economic conditions allow, to be replaced with consumption taxes that better align us with the tax systems of our major trading partners.
Financial literacy – Finally, like motherhood and apple pie, past and continuing efforts to improve financial literacy were lauded from all corners. Still, the general prevailing sentiment is that this is in the early stages, and requires continued focus and resources.