To Clients/Prospects: The federal budget and your financial plan

(March 23, 2004) Demonstrate your added value and deepen your relationships with clients and prospects by sending them this customizable letter highlighting a few of the noteworthy measures from the 2004 federal budget.

For a general budget overview story, please click here.

Dear [Client/Prospect name here],

As you are no doubt aware, Finance Minister Ralph Goodale delivered his first budget on Tuesday in Ottawa. While there were no great surprises in this balanced fiscal plan, there are a few elements that may interest you as a Canadian taxpayer and investor.

In case you haven’t had a chance to wade through the media coverage, I thought you would appreciate this quick overview of some key measures from this year’s federal budget:

2004 Federal Budget

Income trusts capped in a housekeeping budget Staying the course: No surprises in Goodale’s first budget Advisors react to “non-event” budget Budget draws mixed reviews from industry associations Industry insiders analyze return to prudence The federal budget and your financial plan (Client letter) Back to main page

• There were no new personal income tax cuts or changes to RRSP contribution limits.
• The deadline for submissions on disqualifying interest deductibility for loans made for investment purposes has been pushed back until August.
• Tuesday’s budget contained no tax rules changes for trusts, which pay no corporate tax.
• Ottawa is increasing the Canada Education Savings Grant (CESG) to 40% from 20% for low-income families (under $35,000) and to 30% for middle-income families ($35,000 to $70,000).
• Ottawa is also providing new grants for first-year students from low-income families and those with disabilities, and will enhance the Canada Student Loan program, increasing the weekly loan ceiling and reducing the parental contribution expected from middle-income families.
• A disability-supports deduction aimed at taxpayers who receive grants for such things as sign-language interpretation or tutoring services was proposed. The grant is normally added to income, causing the taxpayer both to pay taxes and forfeit some means-tested benefits.
• In last year’s budget, the federal government briefly broached the idea of tax prepaid savings plans (TPSPs). Unlike registered plans, contributions would receive no upfront tax deduction. Earnings within the plan, however, could be withdrawn tax-free. The Finance Department said that consultations after the 2003 budget “raised a number of important issues which require further consideration.”
• The $300,000 small-business deduction limit has been moved ahead one year, to 2005.

One other interesting measure the government announced in its budget was the reinstatement of a $1 billion prudence reserve, to ensure its books stay balanced — an example we can all take to heart in our own personal budgeting and financial planning!

In short, Tuesday’s federal budget is probably not a life-altering one for you, but should you have any questions about how certain budget measures could impact you, or — as always — if you have any non-budget related questions surrounding your overall financial plan, please do not hesitate to contact me at the above number.

Best regards,

[Your signature]

[Your name]