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Federal budget 2014: What employers, HR and payroll need to know

This article was originally published on HRinfodesk

The Federal Minister of Finance Jim Flaherty tabled the Economic Action Plan 2014 in the House of Commons on February 11, 2014, which confirms that the Government is on track to return to balanced budgets in 2015, with new measures that will create jobs and opportunities in an uncertain global economy.

Budget documents indicate that there are no new taxes on Canadian families or businesses. However, the government projects that the deficit will decline to $2.9 billion in 2014-15, after taking into account a $3 billion annual adjustment for risk. A surplus of $6.4 billion is expected in 2015-16, again after taking into account a $3 billion annual adjustment for risk. In the coming years, that surplus is projected to grow steadily before reaching $10.3-billion in 2018-19.

Budget measures of interest to organizations, employers and employees include the following:

  • Enhancing access to Employment Insurance sickness benefits for claimants who are receiving Parents of Critically Ill Children and Compassionate Care EI benefits and fall ill while they are taking care of a critically ill child or a family member that is seriously ill and at risk of dying within a certain period of time.
  • Creating the Canada Apprentice Loan by expanding the Canada Student Loans Program to give apprentices registered in Red Seal trades access to interest-free student loans to cover the costs of training and introduces the Flexibility and Innovation in Apprenticeship Technical Training pilot project to expand the use of innovative approaches for apprentice technical training.
  • Providing assistance to Ready, Willing & Able, an initiative to help persons with Autism Spectrum Disorders become part of the workforce.
  • Over the next four years the Government will provide $222 million annually through transfers, to be matched by provinces and territories, to better meet the needs of persons with disabilities and employers.
  • Implementing an enhanced Job Matching Service to help unemployed Canadians by providing $11.8 million over two years and $3.3 million per year ongoing to launch an enhanced Job Matching Service to ensure that Canadians are given the first chance at available jobs that match their skills in their local area.
  • Focusing federal investments in youth employment to provide real-life work experience in high-demand fields by proposing a reallocation of $15 million annually within the Youth Employment Strategy to support up to 1,000 full-time internships for recent post-secondary graduates in small and medium-sized enterprise.
  • Renewing and expanding the Targeted Initiative for Older Workers for a three-year period, representing a federal investment of $75 million to assist unemployed older workers.
  • Introducing a new Expression of Interest system to ensure Canada has an efficient, flexible immigration system that matches the needs of employers by investing $14.0 million over two years and $4.7 million per year ongoing towards the system.
  • Investing $11.0 million over two years and $3.5 million per year ongoing to strengthen the Labour Market Opinion process to ensure Canadians are given the first chance at available jobs.
  • Reducing the frequency of remittance of source deductions for some small businesses by increasing the threshold level of average monthly withholdings. This measure will apply in respect of amounts to be withheld after December 31, 2014. In particular:
  • . $25,000 (up from $15,000) will be the threshold level giving rise to the requirement to remit up to two times per month

    . $100,000 (up from $50,000) will be the threshold level giving rise to the requirement to remit up to four times per month

The Department of Finance has estimated that 50,000 employers will see their required number of remittances cut in half.

  • Transitioning from currently paying 75 percent of benefit costs to equal cost sharing for retired federal employees who choose to participate in the Public Service Health Care Plan, as well as to increase the minimum years of service required to be eligible for the plan.
  • Entering the 2014 round of negotiations with collective bargaining agents with the policy priority to implement a disability and sick leave management system that is modern, comprehensive, and responsive to the needs of all employees including the introduction of a formal short-term disability plan.

Furthermore, in certain circumstances, special rules ensure that the maximum amount that may be transferred on a tax-free basis by a member leaving an underfunded registered pension plan (RPP) to their RRSP (or other registered plan) will be the same as if the RPP were fully funded. The budget proposes to extend the application of this special rule to additional circumstances for certain commutation payments made after 2012.

For 2014, the definition of “split income” will now include income that is, directly or indirectly, paid to a minor from a trust or partnership if it is derived from a business or rental property, and a person related to the minor is actively engaged on a regular basis in the activities.

Other budget measures that may be of interest include:

  • Increasing the maximum amount of eligible expenses to $15,000 per child for 2014. This maximum amount will be indexed to inflation for taxation years after 2014.The Adoption Expense Tax Credit is a 15 percent non-refundable tax credit that allows adoptive parents to claim eligible adoption expenses relating to the completed adoption of a child under the age of 18.
  • Expanding the list of expenses eligible for the medical expense tax credit to include amounts paid for the design of an individualized therapy plan where the cost of the therapy itself would be eligible for the credit and certain other conditions are met. In particular, the therapy plan must be designed for an individual with a severe and prolonged mental or physical impairment who is eligible for the disability tax credit, for 2014 and later years. In addition, the list of eligible medical expenses is also expanded to include expenses incurred after 2013 for specially trained service animals that assist individuals with severe diabetes.
  • Introducing legislation to address the price gap between identical goods sold in Canada and the United States; details will be announced in the coming months.
  • Continuing investments in Canada’s food safety system. Economic Action Plan 2014 proposes to invest an additional $390 million over five years to strengthen Canada’s food safety system. Funding will support the hiring of over 200 additional inspectors and other staff; establish a national information system to enable authorities to move quickly to detect and respond to food safety risks; and continue core bovine spongiform encephalopathy-related programming aimed at safeguarding human and animal health. In addition, the Government will pursue legislative amendments as needed to facilitate the implementation of food safety program improvements.
  • Prohibiting the charges to consumers for paper bills – including printed credit card statements.
  • Making investments to improve broadband coverage in rural and northern communities and o cap domestic wireless roaming rates within Canada.
  • Developing a framework for oversight on retail payments systems.
  • Amending the Patent Act, the Trade-marks Act and the Industrial Design Act to modernize Canada’s intellectual property framework.
  • Reducing red tape for charities by enabling them to apply for registration and to file their annual returns electronically.
  • Closing a loophole that allows suspended parliamentarians to continue to accrue years of service towards their pensions. To do this, the government will have to add wording to the legislation overseeing parliamentary pensions.
  • Taking action for Canadians in need, for example by helping Canadians prepare for and recover from natural disasters and by introducing a Search and Rescue Volunteers Tax Credit in recognition of the important role played by these volunteers.
  • Increasing the cost of cigarettes and duty free cigarette rates. A carton of 200 cigarettes will now carry about $21 in taxes, up from $17. The 24 percent increase will apply to other tobacco products effective immediately.
  • Eliminating the value of student-owned vehicles from the need assessment process to better reflect current realities in the Canada Student Loans Program.
  • Expanding health-related tax relief under the Goods and Services Tax/Harmonized Sales Tax (GST/HST) and income tax systems to better reflect the health care needs of Canadians.

Legislation will be tabled in the House of Commons shortly to give full effect to the Economic Action Plan 2014.

Yosie Saint-Cyr
First Reference Managing Editor

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Yosie Saint-Cyr, LL.B. Managing Editor

Managing Editor at First Reference Inc.
Yosie Saint-Cyr, LL.B., is a trained lawyer called to the Quebec bar in 1988 and is still a member in good standing. She practiced business, employment and labour law until 1999. For over 18 years, Yosie has been the Managing Editor of the following publications, Human Resources Advisor, Human Resources PolicyPro, HRinfodesk and Accessibility Standards PolicyPro from First Reference. Yosie is one of Canada’s best known and most respected HR authors, with an extensive background in employment and labour across the country. Read more
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