Last week the newly-elected Liberal government tabled its first budget. Much of the talk seemed to be around the size of the deficit. The Grits are projecting to run a massive deficit of $29.4 billion this year. The spending is going towards projects to help stimulate the economy like infrastructure and families. The big winners in the budget are students and seniors. Both groups are seeing more money heading their way.
One of the Liberal’s biggest election platform promises was to make post-secondary education more affordable for students. The government is delivering on several fronts. The Grits are increasing Canada Students Grants by 50 percent. Students from low-income families will see student grants upped from $2,000 to $3,000 per year, while students from the much-talked about middle class will see student grants upped from $800 to $1,200 per year. The Liberals estimate over 347,000 students will benefit from these changes.
That’s not all. The Liberals are re-determining eligibility for financial aid. Under the current system, eligibility is based on a student’s income and financial assets. Under the revamped system, a flat-rate contribution model is being introduced. In exchange for paying the yet-to-be announced flat rate, student’s income and financial assets will no longer be considered.
Lastly, the Liberals are increasing the loan repayment threshold. Under the current system, if a student makes more than $20,210, they’re expected to start repaying their loan. Under the revamped system, students can earn up to $25,000 without repaying their student loan. This will make it easier for recent grads to land a decent, well-paying job without the stress of loan repayment until they’re making a decent wage.
The first big change affects retirees of future generations. The Liberals are rolling back eligibility to 65 from 67 for Old Age Security (OAS). This will mean thousands of dollars in the pockets of future seniors. With only a third of the workforce with a workplace pension plan, OAS is an integral part of the financial plan of many seniors.
Current retirees and those retiring in the not-too-distant future also have reason to celebrate. Guaranteed Income Supplement (GIS) is being topped up by up to $947 yearly, benefiting about 900,000 seniors. The lowest income seniors will see an increase of 10 percent in their total GIS benefits. Going forward, GIS will be based on an individual’s income, not family income. This benefits seniors no longer living together, for example if one needs to go into a long-term care facility.
Other highlights from the budget include:
- Canada Child Benefit: The new payment starts July 1, 2016, replacing the Universal Child Care Benefit (UCCB). The Canada Child Benefit is means-tested – it starts to be clawed back at household income over $30,000, before being fully eliminated for households earning over $190,000.
- Children’s Arts and Fitness Tax Credits: These tax credits are being eliminated by the end of 2017.
- Employment Insurance: The Liberals are making it easier to qualify for Employment Insurance (EI) in 12 regions hit hard by the falling price of oil.
These are just a few of the biggest budget items. If you need help navigating the budget, feel free to contact our office. We can take a closer look to see how it affects your family’s pocket book.