In Depth
Federal Budget 2007
Personal Taxes
Almost everyone gets something on the tax front
March 19, 2007
CBC News
There are small tax reductions this year for almost everyone in the Conservatives' new budget, including transit users, low-income workers, parents, married couples and seniors.
The government promises more tax cuts in the future through its tax back guarantee, which will be legislated with the 2007 budget. It says that interest savings from debt repayment will go toward further tax cuts.
Here is a summary of the changes that will benefit each group of taxpayers:
Transit users
- A public transit tax credit for regularly weekly and electronic fare cards. Before, this was only available to people who used monthly passes.
Low-income workers
- As expected, the government is introducing the Working Income Tax Benefit for workers with low incomes to make working more attractive than being on welfare. It will reduce taxes $500 annually for low-income individuals and $1,000 annually for families. The benefit will apply to 1.2 million low-income families and cost an estimated $550 million a year, according to the budget documents.
Workers supporting dependents
- The deduction for dependents has increased to $8,929 from $7,581, making it equivalent to the basic personal amount. This will benefit families with a stay-at-home dependent spouse, families headed by a single parent with a dependent child, or single workers with a dependent relative, and is worth up to $209 in tax savings, the budget says.
Parents
Parents will see the most changes, including:
- A $2,000 tax credit for each child annually, worth up to $310 to each of the three million Canadian families with incomes high enough to benefit. It will be effective Jan. 1, 2007, and will cost about $1.5 billion a year.
- An end to the $4,000 limit on annual registered education savings plan contributions.
- An increase in the registered education savings plan lifetime contribution limit to $50,000 from $42,000.
- A $100 increase in the Canada education savings grant to $500.
- $140 million over the next two years for a new registered disabilities savings plan for parents with disabled children. It will be similar to a registered education savings plan, with some government contributions and untaxed withdrawals.
Seniors
- A $1,000 increase in the age credit amount to $5,066, worth about $150 annually to each low-income senior.
- An increase in the age limit for conversion of a registered retirement savings plan (RRSP) to a registered retirement income fund (RRIF) to 71 from 69, so that seniors can work longer and keep contributing to their RRSPs before being forced to draw from them.
- As announced earlier, pension income splitting will be allowed. The total pension income of a couple can be divided between the two spouses to minimize the total amount of taxes paid.
Small business owners, farmers, fishermen and fisherwomen
- Will be able to claim $750,000 in lifetime capital gains exemptions instead of $500,000 for investments related to their business, starting March 19, 2007.
Truckers
- Will be able to deduct 80 per cent of their meals for tax purposes instead of 50 per cent. It will be phased in over five years starting Mar. 19, 2007. It will cost $15 million in 2007-08, when truckers will be allowed to deduct 60 per cent of meal costs.
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