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2008 Tax Changes (Tax Year 2007)
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Personal Income Tax
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Reducing Tax Compliance Burden
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RESP'S - Education Saving Plans
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GST Reduction
Personal Income Tax
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A new $2,000 child tax credit will provide up to $310 per child of tax relief to more than 3 million Canadian families.
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Ending the marriage penalty by increasing the spousal and other amounts to provide up to $209 of tax relief for a supporting spouse or single taxpayer that is supporting a child or relative. |
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Extending the public transit tax credit to innovative fare products like
electronic fare cards and weekly passes when used on an ongoing basis. |
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Increasing the lifetime capital gains exemption for farmers, fishermen
and fisherwomen, and small business owners from $500,000 to $750,000. |
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Enacting the Tax Fairness Plan, which delivers over $1 billion in additional tax savings for Canadians including:
- Increasing the age credit amount by $1,000 to $5,066.
- Allowing pension income splitting.
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Encouraging older workers to stay in the labour market by permitting
phased retirement. This would allow an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. |
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Increasing the age limit from 69 to 71 for converting a registered
retirement savings plan (RRSP) to strengthen incentives for older Canadians to work and save. |
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Amending the list of qualified investments that can be held by RRSPs and
other registered plans to include most investment-grade debt and publicly-listed securities. |
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Increasing the share of meal expenses that long-haul truck drivers can
deduct for tax purposes from 50 to 80 per cent. |
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Mini Budget - The basic personal amount was increased from $8,896 to $9,600, retroactive to January 1, 2007. The basic personal amount will increase another $500 to $10,100 in 2009. |
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Mini Budget - The lowest tax bracket has been reduced from 15.5% to 15% retroactive to January 1, 2007. |
Reducing Tax Compliance Burden:
To further reduce the paperwork burden of small business, Budget 2007 proposes to allow small businesses to reduce the number of tax remittances and filings by:
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Introducing quarterly instalments of corporate income tax to replace monthly instalments for certain small Canadian-controlled private corporations.
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Increasing to $3,000 from $1,000 the corporate income tax payable threshold, at or below which corporations are eligible to remit annually.
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Increasing to $3,000 from $2,000 the net personal income tax threshold, at or below which individuals do not have to pay instalments.
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Increasing to $3,000 from $1,000 the average monthly withholdings threshold, below which businesses may be eligible to remit source deductions quarterly.
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Increasing to $1.5 million from $500,000 the taxable supplies threshold, at or below which businesses can file a GST/HST return annually.
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Increasing to $3,000 from $1,500 the net tax threshold, below which annual GST/HST return filers can remit the tax annually.
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RESP'S - Education Saving Plans
Budget 2007 proposes changes that will provide additional flexibility and encourage greater savings in these plans by:
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Eliminating the $4,000 limit on annual RESP contributions. |
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Increasing the lifetime limit on RESP contributions—for the first time since 1996—to $50,000 from $42,000. |
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Increasing the maximum annual amount of CESG that can be paid in any year to $500 from $400 (and to $1,000 from $800 if there is unused grant room from low contributions made in previous years). |
Each child will continue to be eligible to receive up to $7,200 in CESGs
GST Reduction
The GST/HST will be lowered by 1% as of January 1, 2008. This will result in the GST rate being 5% and the HST rate will be 13%. The GST credit for low- and middle-income Canadians will remain at its current levels.
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