Show clients you’re proactive by sending them this customizable letter about the Federal Budget.

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Dear Client/Prospect name

As you know, Finance Minister Jim Flaherty delivered his federal budget on Thursday in Ottawa.

This year’s budget takes aim at deficit reduction, and closes some key tax loopholes in an effort to generate revenue for Ottawa.

As such, there are several items that could affect your financial plan, and one or two that present opportunities. In case you haven’t had a chance to review the media coverage, I thought you would appreciate a quick overview.

  • Small business owners will benefit from a $50,000 increase in the Lifetime Capital Gains Exemption to $800,000 effective 2014. The exemption will be indexed to inflation after 2014.
  • Manufacturing companies get help from a two-year extension of the accelerated capital cost allowance for machinery and equipment. This line item lets business owners write down capital costs more quickly and reap tax advantages from equipment purchases before those goods begin to depreciate.
  • Businesses owners needing to train employees will be able to take advantage of the Canada Job Grant, which will provide up to $15,000 per person for skills training.
  • Philanthropy gets a boost from a Donor Super Credit which complements the existing Charitable Donations Tax Credit with an additional 25% credit for first-time donors. The existing federal charitable tax credit system provides a 15% credit on the first $200 of donations, and a 29% credit above the $200 level. The super credit adds 25% to each of those credit rates up to $1,000.
  • While there were no changes to the pension system, the government plans to work with provinces and plan sponsors to promote low-cost, secure pension options.
  • Criticism about the over generous nature of the dividend tax credit system has led to a reduction of the gross-up factor applicable to non-eligible dividends from 18% to 25%, and the corresponding dividend tax credit to 13/18ths of the gross-up amount, from the current 2/3.
  • The government will close another loophole with measures ensuring derivative transactions can’t be used to convert fully taxable ordinary income into capital gains, which are taxed at a lower rate.
  • Other rule changes will eliminate unintended tax benefits relating to leveraged insured annuities and leveraged life insurance arrangements, commonly known as 10/8 arrangements.
  • Finally, the budget will give CRA new tools to reduce international tax evasion and aggressive tax avoidance, including a new Stop International Tax Evasion Program.

I hope you find these highlights useful. If you’d like to discuss these and other federal budget initiatives and how they affect your financial plan, please don’t hesitate to contact me.


[Your signature]

[Your name]


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