Adrian Mastracci, president of KCM Wealth Management, says “A lot of this budget will be popular with Canadians. This one has something for everyone."

Vancouver, BC (May 2, 2006): Finally, the long awaited Federal Budget from the Conservative Party is here. Presented today by the Honourable Jim Flaherty, Finance Minister.

Adrian Mastracci, “fee-only” investment counsel with Vancouver based KCM Wealth Management, comments, “As in past budgets, there was plenty of anticipation. A lot of this budget will be popular with Canadians. This one has something for everyone.”

A note of caution. The budget measures are proposals. They will have to be passed into law before they take effect. Further, some proposals may be changed between now and receiving royal assent.

I’ll touch upon two of the measures.

1. Donating securities to a charity

There are many investors who make a charitable contribution in cash or by selling securities. Another avenue available since 1997 is to donate eligible securities directly to the registered charity.

The incentive is that the capital gains inclusion rate on the donated securities is reduced. In 2005, the capital gain inclusion was 25% versus the normal 50%. As of today, the capital gain inclusion is zero.

The donation credit is based on the market values of the donated securities. Investors should speak to the investment advisor to co-ordinate the transfer directly to the charity.

This measure also assists those who want to pursue leaving a charitable legacy. The removal of the tax on the capital gain presents a real planning opportunity.

2. Pension Income Credit

The $1,000 pension income credit has been increased to $2,000. This is a small step for retirees who have seen a substantial reduction in interest income since the year 2000.

My two cents

Politicians of every stripe continually remind taxpayers of  the variety of “tax cuts” that come their way.

My comment is that what taxpayers are really getting is a small return of the contribution that all taxpayers have already made.

I would be happy to field questions on the entire budget.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.