Federal Budget 2015 was tabled on Tuesday, April 21 by Finance Minister Joe Oliver, and CARP was on Parliament Hill to see what the budget contained for older Canadians. The federal budget included several items geared towards older Canadians, including help saving for their own retirement, increased supports for informal caregivers, and relief to seniors and people with disabilities in need of making their home safer and more accessible. CARP advocated for action on all of these major measures announced in the budget and got what we demanded.
Specifically, here are the budget items that may impact you:
- Tax Free Saving Accounts nearly doubled from $5,500 to $10,000. This will be effective starting this 2015 taxation year, which means you can contribute $10,000 into your TFSA this year, putting away more of your own money, tax-free, for your ongoing retirement needs.
- Reduced mandatory Registered Retirement Income Fund (RRIF) withdrawal rates. To reflect more accurately the long-term historical real rates of return and expected inflation, the RRIF minimum withdrawal rate will be lowered from 7.38% to 5.28% at the starting age of 71. The new rates will allow almost 50% more capital to be preserved to age 90, compared to the current rates. See Table 4.1.2 on page 244 in the budget to see how the new rate compared to the existing ones. As a result, the new rates mean that the amount you have to withdraw from your RRIF will be lowered, giving you more control over your assets. This will also be effective starting 2015 taxation year.
- Extended Employment Insurance Compassionate Care Benefits from 6 weeks to 26 weeks (6 months) for those who are caring for a terminally ill family member. Under current eligibility criteria, the terminally ill family member must be of significant risk of death within the next 6 months, but this criterion will be changed to 12 months. This is a significant advancement for caregivers, especially older workers who have to leave the workforce to provide care, relieving families of the financial burden of caregiving and providing more flexibility as they go through one of the most difficult times.
- A New Home Accessibility Tax Credit for seniors and persons with disabilities to help improve safety, access and functionality of their homes. This will be a 15% non-refundable income tax credit, applied on up to $10,000 of eligible home renovation expenditures. This means you will get some money back in your pocket for the cost of renovating your home to make it more accessible and safe – helping you and many others to age in your own home. You can claim up to $10,000 of eligible home renovation expenditures per year and get up to $1,500 in tax relief.
CARP got results on RRIF withdrawals and TFSAs, important longstanding issues for which CARP advocated. To find out more about the TFSAs, cilck here. CARP first lobbied for the elimination of RRIF withdrawals during the 2008 recession, when it was clear that many older Canadians had suffered major losses in the market crash. Prior to the 2008 election, CARP spearheaded a campaign which resulted in a 25% reduction of RIFF withdrawal, but the government granted the reduction for that year only and did not implement any rule changes. For people who watched their retirement savings disappear right before their eyes, this discount was certainly better than nothing but didn’t go far enough.
As a result, CARP’s work on this file continued. At the end of 2014, CARP renewed the call for the elimination of mandatory minimum RRIF withdrawals in its position paper and has called to action CARP members to write to local MP’s and finance ministers and/or opposition finance critics about how mandatory RIFF withdrawals have had an adverse impact on their retirement savings and demanding that the rates be eliminated altogether. In December 2014, Finance Minister Joe Oliver hinted during an interview that the issue of RRIF reform is being looked at, giving a heads up to CARP members that RIFF rules would likely to be considered in the budget.
CARP members voiced their support for relaxed RRIF withdrawals rules – almost 90% of CARP members have or will have RRIFs, but more than half are worried they will outlive these savings, according to a CARP Poll. Although the mandatory withdrawal rule was not completely eliminated, CARP welcomes the budget’s relaxed rates as an important first step to ensuring all Canadians have financial security during retirement.
CARP members also voiced their support for an increase to the TFSA as a measure to help Canadians save and have more control over their savings. According to a CARP Poll, two-thirds of CARP members support increasing the TFSA limit from $5,500 to $10,000 and a vast majority (81%) of them have a TFSA.
CARP has long called for greater caregiver financial support as part of a comprehensive approach to support caregivers and older workers. In 2011, CARP successfully advocated for caregiver support, which took the form of the current federal non-refundable Family Caregiver Tax Credit, which helped to recognize the value of caregivers but did not go far enough. CARP welcomes the extension of EI compassionate care benefit, but also recognizes that the benefit only applies to those who are caring for a terminally ill family member, and excludes many caregivers who must also leave the workforce to provide heavy care to loved ones with demanding needs, such as those with dementia or ALS. CARP is now calling on the government to eliminate the requirement that the care provided must be for someone who is terminally ill.
CARP also welcomes the new Home Accessibility Tax Credit as it aligns with CARP’s long-standing advocacy on helping people age at home. Aging Canadians want to live at home for as long as possible and want to see greater access to home care and affordable housing that meets their needs as they age. This new tax credit helps more people remain in their own homes longer.
Overall, CARP welcomes the budget for responding to issues that CARP has long called for. However, more needs to be done for low-income seniors, particularly single seniors, and federal leadership is needed to bring about transformative healthcare reform. As outlined in CARP’s 2015 Pre-budget Recommendations and Seniors Vote, CARP continues to call for:
- Increase income supports, especially for single seniors, including OAS, GIS and spousal allowances; increase exemption for casual earnings in GIS rules
- A reversal of the OAS age of eligibility from 67 back to 65
- Help for older workers to get and keep their jobs
- Increase CPP and/or create new universal pension plan
- Work with the provinces to create a national pharmacare plan, with an ultimate goal of first dollar coverage for all Canadians
- Work with the provinces to fund and set standards to improve access, affordability, and quality of post-acute and chronic care, in the home and in the community, with particular focus on dementia care
More work needs to be done to make these demands a reality, especially with the federal election being months away, CARP will continue to advocate and call on representatives to make these issues their priority.
Watch and read CARP’s media mentions and appearances from Parliament Hill:
– Susan Eng, VP Advocacy:
“Federal Budget 2015 Will Lay out Tories’ Election Planks published”
– Huffington Post “Federal Budget: Tax cuts and other financial relief published”
– Ottawa Citizen “Don’t limit caregiver aid to terminal cases”
– The Chronicle Herald “As Canadians live longer, budget offer DIY financial tools to cope: Mayers”
– Toronto Star “’Costly TFSA changes a problem for PM‘s ‘granddaughter to solve’: Oliver”
– CTV News “No mention of Maley Dr. in federal budget” – Sudbury Star
VIDEO: CTV National News Budget Special – Susan Eng at 9:10
VIDEO: “Budget 2015: Seniors win on savings and home renovations breaks”
VIDEO: “Canadian Association for Retired Persons details Budget 2015” – 24 Seven Exclusive
– The Close, BNN: “Concerns for seniors” – Bernice Rempel, Edmonton
– CTV News Video Network “Nova Scotia seniors benefit from federal budget, says CARP” – Bill
VanGorder, Halifax Chapter Chair
–CBC News Nova Scotia “Relaxed rules on retirement savings plans, to new tax credits”- Bill VanGorder, Halifax Chapter Chair
– Janet Gray, Ottawa Chapter Chair, on CBC Ottawa Morning VIDEO: CTV National News
– Bernice Rempel, Edmonton Chapter Chair, and Bill VanGorder, Halifax Chapter Chair on VIDEO: CTV National News