Income-splitting change will help older Canadians, group says
The Canadian Association for the 50-Plus has applauded the federal government's plan to introduce income-splitting for seniors.
The changes were introduced Tuesday by Finance Minister Jim Flaherty but they were overshadowed byhis announcement of new taxes on income trusts.
Flaherty said that pensioners would be able to split their retirement income as of the 2007 taxation year. Until now, income splitting was limited to Canada Pension Plan payments.
"We're very pleased that they've done that," Bill Gleberzon of the Canadian Association for the 50-Plus, also known as CARP, told CBC Newsworld on Wednesday.
Independent MP Garth Turner, who was recently ousted fromthe Conservative caucus,also agreed with the move.
"A lot of pensioners today, the income basically comes through the hands of one person, typically the male, in a household. And that puts the household in a higher tax bracket," Turner said.
"If they were able to even out the income between them they'd both be in a lower tax bracket and save some money," he said.
Gleberzon also voiced support for the government's plan to increase the age credit amount by $1,000 to $5,066, effective this taxation year. The change will benefit low- and moderate-income seniors.
Income trust changes will take their toll
Thechanges to income-trust taxation were taking a toll on investors' portfolios on Wednesday as trusts sold off on the TSX.
Gleberzon acknowledged that the changes to income trusts are going to mean heavy adjustments for a lot of seniors "because income trusts did kick a very good monthly income."
But he said the changes are being balanced somewhat by the four-year transition period granted to existing trusts before the new taxes come into force.
The National Pensioners and Senior Citizen Federation also gave its backing to the moves unveiled by Flaherty.
The federation's Dianne Urquhart said the group is very concerned about the amount of government revenue lost ascorporations cut their tax bill by converting to trusts.
"Seniors are very much reliant upon our health-care system and social security," she said.