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Moncton Times & Transcript ~ Tax Help Plus ~ Federal Budget ~ March 20, 2007 - 06 May 2007 by TaxHelp
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Federal Budget.
Roger Haineault – “Tax Help Plus” – March 20, 2007.
The federal Conservatives delivered their second budget in Ottawa yesterday afternoon, building on their previous efforts. While the hallmark of the Liberals was broad based tax cuts, Finance Minister Jim Flaherty continued with his targeted spending and incentives.
From a generic point of view, most people like tax cuts. They affect all taxpayers and no one group seems to have a significant advantage. However, yesterday’s budget was interesting and while many people may feel that they have been left out, for the most part, there was lots of strategic development.
So here’s what affects most of us. The senior credit and pension income splitting was confirmed. Parents with kids under the age of 18 now have a new non-refundable tax credit of $2,000 per child that can be split between spouses. Those who have previously claimed a spouse or eligible dependent had a reduced credit. It now equals the basic personal amount that all of us claim. Registered Education Savings Plans have an increased top limit and the government grant has gone up 25 per cent. The maximum age for Registered Retirement Savings Plans has been bumped up to 71 from 69. There are programs geared to postpone retirement and still allow access to Registered Pension Plan payments. And there are a number of initiatives to further help those who deal with disability. Taking a high profile, there is a new Working Income Tax Benefit designed to help those who are reluctant to leave the comfort of welfare (if there is such a thing), for fear of losing other benefits. This benefit can be prepaid so that it will be attached to the GSTC cheque to help offset costs.
For those operating a business, there are a number of new rates applied to common depreciable assets like computers and some types of buildings. Also, the lifetime capital gains exemption limit for those who qualify has also increased from $500,000 to $750,000 for farmers, fishers and small business.
So what are some of the things less likely to have been trumpeted?
If you are an installment tax payer, the threshold has increased from $2,000 to $3,000. In the old days, long range transport drivers could claim a deduction of their meal expense at 80 per cent. This is being re-introduced and phased in over the next five years with an immediate increase to 60 per cent. For those in the child care business, there is a now a non-refundable tax credit for those who create new daycare spaces equal to 25 per cent (up to $10,000 per space) of qualified expenditures. Short term out-of-country travelers have had their 48 hour exemption limit doubled to $400. Buying a vehicle? A new gas guzzler could have up to a $4,000 penalty tax applied while a fuel efficient vehicle could qualify for a tax rebate of up to $2,000.
What did I think we’d see that still isn’t here?
Many Canadians have their wealth tied up in capital assets. The person with the duplex may want to sell to buy a triplex. However, there is a disincentive to trade up if he or she has to pay capital gains tax on the sale. When the Conservatives campaigned, they stated that they were going to deal with this issue and waive the taxes if the money was reinvested within six months.
Oh well, maybe next year.
Roger Haineault is with Tax Help Inc. His column "Tax Help Plus ..." appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 855-HELP (4357) or by emailing roger@help4taxes.ca
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