| |
 Your
Money
Matters
April
2012
Issue
Federal Budget 2012
Some highlights of the Federal Budget
OAS/GIS Eligibility raised to age 67
The eligibility age for OAS and Guaranteed Income Supplement (GIS)
will gradually raise from age 65 to 67, starting April 2023. This
will be fully implemented by January 2029.
This will not affect anyone who is 54 or older as of March 31, 2012.
Those who were born on or after February 1, 1962 will be eligible
for OAS at age 67. Those who were born between April 1, 1958 and
January 31, 1962 will be eligible between ages 65 and 67.
|
Year of birth |
|
|
1958 |
1959 |
1960 |
1961 |
1962 |
|
Month of Birth |
OAS/GIS eligibility age |
|
January |
65 |
65 + 5 months |
65 + 11 months |
66 + 5 months |
66 + 11 months |
|
Feb - March |
65 |
65 + 6 months |
66 |
66 + 6 months |
67 |
|
April - May |
65 + 1 month |
65 + 7 months |
66 + 1 month |
66 + 7 months |
67 |
|
June - July |
65 + 2 months |
65 + 8 months |
66 + 2 months |
66 + 8 months |
67 |
|
Aug. - Sept. |
65 + 3 months |
65 + 9 months |
66 + 3 months |
66 + 9 months |
67 |
|
Oct. - Nov. |
65 + 4 months |
65 + 10 months |
66 + 4 months |
66 + 10 months |
67 |
|
Dec |
65 + 5 months |
65 + 11 months |
66 + 5 months |
66 + 11 months |
67 |
In line with the increase in the OAS/GIS eligibility age, the ages
at which the Allowance and the Allowance for the Survivor are
provided will also gradually increase from 60-64 (under current
rules) to 62-66 starting in April 2023. This change will not affect
anyone who is 49 years of age or older as of March 31, 2012.
Goodbye Penny
The Royal Canadian Mint will cease distribution of pennies to
financial institutions, effective fall 2012. After the Mint ceases
distribution, businesses will be asked to return pennies through
their financial institutions to the Mint for melting and recycling
of the metal content.
According to the budget, it's costing $11 million a year to mint the
penny which translates to 1.6 cents per penny.
Since the cent will continue to be Canada's smallest unit of
currency, they are still good. If a customer is paying by cheque,
credit card, or debit, payments can be to the penny. If they are
paying by cash, if they don't have the exact change, the transaction
will be rounded to the nearest nickel. Example: $1.02 will be $1.00
- $1.03 will be $1.05.
Added Flexibility for RDSPs (Registered Disability Savings
Plans)
-
Plan Holders
The budget proposed to allow, on a temporary basis, certain family
members to become the plan holder of the RDSP for an adult
individual who might not be able to enter into a contract.
Specifically, where, in the opinion of the an RDSP issuer, an
individual's ability to enter into a contract is in doubt, the
spouse, common-law partner, or parent of the individual will be
considered a "qualifying family member" and will be eligible to
establish an RDSP for the individual.
-
Proportional Repayment Rule
The Budget proposes to introduce a proportional repayment of $3
of Canada Disability Savings Grants (CDSGs) or Canada Disability
Savings Bonds (CDSBs) for each $1 withdrawal made from an RDSP. This
rule will replace the 10-year repayment rule only in respect of RDSP
withdrawals. The existing 10-year repayment rule will continue to
apply where the RDSP is terminated or de-registered, or the RDSP
beneficiary ceases to be eligible for the Disability Tax Credit (DTC)
or die
-
Maximum and Minimum Withdrawals
The Budget proposed to increase the maximum annual limit for
withdrawals from Primarily Government-Assisted Plans (PGAPs), and to
extend to al RDSPs the minimum annual withdrawal requirement that
currently applies only to PGAPs.
These measures will apply after 2013.
-
Rollover of RESP Investment Income
The Budget proposes to allow investment income earned in an RESP to
be transferred on a tax-free basis to an RDSP in the plans share a
common beneficiary. The amount of the RESP investment income rolled
over to an RDSP may not exceed, and will reduce, the beneficiary's
available RDSP contribution room.
The rollover amount will be included in the taxable portion of RDSP
withdrawals. Subscriber contributions in the RESP will be retured to
the RESP subscriber on a tax-free basis.
This measure will apply to rollovers of RESP investment income made
after 2013.
-
Termination of an RDSP following Cessation of Eligibility for the
Disability Tax Credit (DTC)
The Budget proposes to extend, in certain circumstances, the period
for which an RDSP may remain open when a beneficiary becomes DTC-ineligible.
An election will generally be valid until the end of the fourth
calendar year following the first full calendar year for which a
beneficiary is DTC-ineligible.
If you have any questions about the 2012 Federal Budget or would
like clarification on any of the points, please don't hesitate to
contact us, we would love to help. In addition, if you check on the
following link there are details about the entire budget:
Budget Notes from Collins Barrow
Theresa Wever and the Money Concepts Team
Commissions,
trailing commissions, management fee and expenses all may be
associated with mutual fund investments. Please read the prospectus
before investing. Mutual funds are not guaranteed, their values
change frequently and past performance may not be repeated.
Source Invesco Trimark & The Canadian Press |
