Exclusive to Friends and Clients March 4, 2010 With our Compliments: Ted Wernham BA CLU CFSB EPC

Listen to Budget Review  Listen live to BOOMER WEALTH RADIO on am980.ca Saturday, March 6 at 1:30pm. Learn more about how this Budget benefits you and your family.     "BROWN BAG" BUDGET Might as well take it with you; no ELECTION goodies for dessert!   LONDON, ONTARIO - Ted Wernham, President of Wernham Wealth Management Inc., prepared a synopsis of the 2010 Federal Budget provisions on behalf of t he firm's clients and friends today.  "This is a Brown Bag Budget" Wernham said. "It is designed to signal the Government's concern about jobs and growth, with neither tax increases nor tax relief."  "The Conservative Government knows that this Budget will pass the Opposition test, so Mr. Flaherty baked no cookies or taxpayer treats.  Goodies next time, perhaps, when an Election will be imminent. Just like any brown bag, this Budget is timely and temporary." Wernham went on to comment "Sort of like the lunch you make, (not as good as Mom's), this  Budget is not much to write home about. You see, nothing fancy, nothing long term, just an old fashioned brown bag to get us through." The following Commentary is an overview of the 2010 Federal Budget provisions and benefits.  None of these items are yet law and you are advised to consult with your advisor, accountant or other tax professional before relying on or implementing any of the measures described.     WHAT'S IN THE BAG? Summary of Selected 2010 Budget Proposals Certainly, these are not all of the provisions of the 2010 Budget, but these are provisions of interest to our clients.   Note: attribution of commentary to Doug Caroll, vice president, tax and estate planning at Invesco Trimark and Doug Watt, editor at advisor.ca . Aside from some targeted measures that should benefit the disabled, charities and families, there's little to attract the attention of advisors in Finance Minister Jim Flaherty's latest economic blueprint. Improving the RDSP Changes to the Registered Disability Savings Plan (RDSP) will allow a ten-year carry forward of Canada Disability Savings Grant and Canada Disability Savings Bond entitlements "in recognition of the fact that families of children with disabilities may not be able to contribute regularly to their plans," the budget documents state. So if the financial circumstances are such that you can't start up an RDSP at an earlier age, when you start up later, the accumulated amount will be available to catch up. It won't go back any earlier than when the RDSP program was implemented [in 2007].   In addition, current RRSP rollover rules will be extended to allow a rollover of a deceased individual's RRSP proceeds to the RDSP of a financially dependent infirm child or grandchild. Should I be funding the RDSP or should I be putting money into my own RRSP?  is an easier question to answer now. This allows parents a little more flexibility and the knowledge that they can eventually get that money rolled over into a RDSP. Help for charities Specifically, the amount a charity spends each year on charitable activities must be at least the sum of 80% of the previous year's donations (the charitable expenditure rule) and 3.5% of all assets (the capital accumulation rule). Charities argued the rules imposed a complex and costly administrative burden. This year's budget proposes to eliminate the charitable expenditure rule and to modify the capital accumulation rule. "The budget suggests that the government is comfortable that the Canada Revenue Agency's ability to monitor charities may very well be sufficient; that taking away the disbursement quota will not mean that those charities will either intentionally or unintentionally abuse their status as charities."  "From an estate-planning standpoint, this could very well change how people decide they are going to make a donation to a charity," because the disbursement quota will no longer be an issue that has to be worked around.  "Estate planners will be looking at this part of the budget very carefully, particularly for high net worth clients who may be making large donations and looking at ways to make those donations more effective." Child care support Ottawa is also changing the rules regarding the Universal Child Care Benefit (UCCB) so that single parents receive comparable tax treatment to two-parent families. "When there are two parents, the UCCB is taxed to the lower income parent, when you are a single parent you could be facing higher effective taxation on that benefit,"  Under the budget proposals, single parents will be allowed to include the benefit as part of the income of the dependent child. "In most cases, that child will not be taxed, so that should assist single parents, who are dealing with different issues than two-parent families." For 2010, Ottawa estimates, the change will provide up to $168 in tax relief for single parents with one child under six years of age. In shared-custody situations, the UCCB taxable benefit will be split between the two parents. Closing loopholes The budget contains several initiatives Ottawa says will protect the integrity of the Canadian tax system; essentially the closing of tax loopholes. For instance, new rules on stock options are intended to address tax planning practices which have allowed stock-based employment benefits to escape taxation when such options are cashed out. "Stock options are not supposed to be tax-free," Flaherty said at a news conference, noting Ottawa loses as much as $300 million a year in tax revenues from "a loophole used by some relatively well-off people." Ottawa will also begin consultations on a new reporting regime for so-called aggressive tax avoidance schemes.   This Summary is, by no means, offered as a complete review of today's Federal Budget.  The voting public, in time, will judge whether the medicine prescribed will last long enough for the pain to go away.   Sincerely;     Ted Wernham BA CLU CFSB EPC

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