Blog post by Matthew Bota
The federal government presented its budget on March 22nd. I’m a political junkie, so year after year I’d wait with baited breath to see which direction our political leaders were taking us. A major highlight for me is the pre-budget news conference where the Finance Minister purchases a new pair of shoes, and reporters attempt to get what little pieces of information they can out of him. I also look to see how close the country is to balancing its budget. I was an active observer, but I had no idea the kind of frenzy that federal budget season can whip up in a law office.
I began writing this blog post six days before the budget, so I didn’t know what the federal government had in store for us. I did know that there were rumours that the capital gains inclusion rate would be jumping from 50% to possibly 66.67% or 75%. I know, I know, the capital gains inclusion rate is probably keeping you all up at night too. For people with capital deployed in the economy however, this possible change can result in major increases to their tax bill.
As an articling student in a law firm with a corporate practice, I can tell you that it was “all hands on deck” the week before the budget was released. Business owners were anticipating an increase to the inclusion rate and transactions were underway. Lots of document review took place, closing documents were prepared and deals were made. Lo and behold, the federal government decided to make no change to the inclusion rate, and business continues on as usual. At least until next year.
The pre-budget whispers have driven home how government policy affects what we do. The federal budget is a great example of policy affecting corporate law and estate planning. There are many other examples of policy changes that might grab fewer headlines; however, it remains that lawyers and law students must stay tuned in to the legislative process. Paying attention to Parliament and the Ontario legislature may be easier to do if you are a political junkie, but it is important to remember that our clients will look to us as experts. Staying on top of current developments in the law is a must.