2005 Federal Budget Highlights:

Finance Minister Ralph Goodale's February 23rd, 2005 budget was typical of that tabled by a minority government—trying to please almost everyone and offending as few as possible.

Major spending initiatives proposed in the Budget included $13 billion of increased funding for the military and security, $3.4 billion over five years in additional international assistance, $5 billion over five years for early learning and child care initiatives, and a minimum of $4 billion over five years for action on climate change, as well as a further $1 billion for “other environmental priorities.

Other Significant Spending Initiatives:

Health Care - An additional $805 million over five years to deliver on the government’s earlier commitments
Aboriginal Communities - $735 million over five years
Arts & Culture - An additional $668 million
Immigration - $398 million over five years for immigration and settlement programs.
Regional Economic Development - An additional $800 million
Research - An additional $375 million in funding for federal research councils
Guaranteed Income Supplement - Benefits for low-income seniors will be increased by $2.7 billion over five years through increased monthly benefits of $36 a month for singles and $58 a month for couples by January 1, 2007.
Gasoline Tax Revenues - Implementation of an earlier pledge to share $5 billion in gasoline tax revenues with cities and communities.

Personal Tax Changes:

· Increase in Non-Refundable Tax Credits - The Budget proposes to increase certain non-refundable tax credits above the annual indexed amounts. The indexed basic personal amount, to which all taxpayers are entitled, is $8,148 for 2005. The Budget proposes that the indexed amount be supplemented by $100 for 2006, $100 for 2007, $400 for 2008 and, for 2009, the greater of $600 and the amount needed to bring this amount to $10,000. Thus, for 2009, the basic personal amount will be a minimum of $10,000.

· Changes to Retirement Savings Limits - Click here for the new RRSP Limits

· Removal of Foreign Content Limit in RRSP’s - Currently, the foreign content of deferred income plans, such as registered retirement savings plans, is restricted to a maximum of 30% of the cost of the plan’s assets. If the 30% limit is exceeded, a penalty tax is eligible. The Budget proposes to repeal the foreign content restriction, effective January 1, 2005.

The Budget also proposes to allow registered retirement savings plans to invest in certain investment-grade gold and silver bullion coins and bars, and related certificates. This change is effective for investments made on or after February 23, 2005.

· Changes in the eligibility criteria for the disability tax credit - The Budget proposes several changes to the eligibility criteria for the disability tax credit including the extension of eligibility to individuals with multiple restrictions that, in the aggregate, equate to a marked restriction in a single basic activity of daily living. Other changes include clarification of the legislation with respect to conceptualization of impairments, alignment of legislative criteria for mental impairments with administrative practice, improved definition of life-sustaining therapy activities, and expansion of the types of health practitioners eligible to certify taxpayers for credit eligibility. These changes are effective January 1, 2005.

· Medical Expense Supplement - The Budget proposes to increase the maximum refundable medical expense supplement to $750 from the current $571. This measure is effective January 1, 2005.

· Medical Expense Credit - The list of expenses qualifying for the medical expense credit has been expanded to include: phototherapy equipment for skin disorders, oxygen concentrators, deaf-blind intervening services, reading services for the blind and marijuana under certain restricted circumstances. These changes are effective January 1, 2005.

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