CICA Grades the Federal Budget “B Plus”

OTTAWA, - The Canadian Institute of Chartered Accountants (CICA) gives the federal budget a B Plus grade saying it strikes the right balance by keeping Canada competitive and demonstrating prudent fiscal management. "This budget charts a course that will help Canada be competitive in attracting investment while establishing a fiscal framework that sets the stage for sustainable recovery and economic growth," said Bruce Flexman, Chair of the CICA's Tax Policy Committee.

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The CICA applauds the government's commitment to previously announced corporate tax reductions. "This signals that Canada is serious about attracting business investment," said Flexman. "It also provides certainty for business leaders." The budget contained a number of positive business related measures, including:

• Extending for a two-year period the accelerated capital cost allowance rate for investment in manufacturing or processing machinery and equipment;
• Providing a temporary Hiring Credit for Small Business to encourage additional hiring by that sector.

However, Flexman said the budget did not rate an A grade because it failed to address the need to reduce the complexity of Canada's tax regime."This is another important factor in attracting investment," said Flexman. "The system must eventually be simplified in order to lessen the burden of compliance and reduce complexity." For individual Canadians the federal budget provides a number of benefits. They include:

• Enhancing the Guaranteed Income Supplement (GIS) for seniors;
• Establishing a new Family Caregiver Tax Credit;
• Establishing a new Children's Arts Tax Credit for programs associated with artistic, cultural, recreational and development activities;
• Extending for one year, the ecoEnergy Retrofit - Homes program.

The CICA, said Flexman, is encouraged the government remains on track to balance the budget by 2015-16, if not earlier. In addition, he said Canada's CAs are pleased the government is launching a comprehensive review of departmental spending aimed at finding greater efficiency and effectiveness. "Program spending must be closely controlled to ensure that the government follows through on its planned timetable to balance the budget," said Flexman. "We cannot afford any slippage. Execution is the key going forward." The CICA also welcomed announcements about government's intention to provide funding and appoint a Financial Literacy Leader to advance financial literacy initiatives. "The CICA's national survey in 2010 found that Canadians view financial literacy as an essential life skill and that many recognize they can use some help," noted Flexman. "Developing ways to help Canadians gain greater financial knowledge is critical to Canada's ongoing prosperity and growth."

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