Dollars and Sense: Post Budget Details
With the Federal Budget 2007 now upon us, I thought I would use this opportunity to summarize some, but not all, of the proposed changes.
Business Income Tax Measures
- For those of you with corporations, it is proposed that the general, federal corporate tax rate will continue to decrease from its current rate of 21% to 18.5% by January 1, 2011.
- Capital cost allowance, which is supposed to recognize depreciation on assets, is proposed to increase for buildings used for manufacturing and processing, other non-residential buildings and computer equipment, to name a few.
- Remittance thresholds for payroll, GST, and corporate instalments are proposed to increase.
- The Budget 2007 proposes a new credit for businesses that create child-care spaces.
Individual and Family Tax Measures
- The Budget 2007 contained no measures to reduce personal tax rates or increase personal tax bracket amounts.
- A new "Working Income Tax Benefit" for low income individuals and families.
- A "Registered Disability Savings Plan" the will be generally based on the existing Registered Education Savings Plan.
- Proposed improvements to the Registered Education Savings Plan (RESP) to make it more flexible.
- A new "Child Tax Credit" for each child under the age of 18 at the end of a taxation year.
- An increase in the life time capital gains exemption from the current $500,000 to $750.000.
- An increase in age when individuals have to stop contributing to an RRSP from 69 to 71.
- Elementary and secondary school scholarships will now be fully exempt from tax.
- The deductible portion of meals expenses for truckers will be increased from 50% to 80%,
- An increase in the threshold below which no personal instalments are required.
For further information about these and other proposals, visit www.cra-arc.gc.ca and look for "Budget 2007".
Sheila Nelson is a Chartered Accountant and partner in Chan Foucher LeFebvre LLP. You can reach her at www.cflaca.com
or by email at firstname.lastname@example.org
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