Tax Measure Highlights 

CGA-Canada's 2007 Federal Budget Response

Individuals and families

• $2,000 non-refundable tax credit for children under 18 years of age ($310 per child max) claimable by either parent
• Spousal tax credit (also available for wholly dependent relative) increased to basic personal amount, will be up to $10,000 by 2009
• Confirmed $1,000 increase to age credit
• Confirmed pension income splitting between spouses
• Increased availability of public transit tax credit; weekly passes and electronic cards now qualify
• Lifetime capital gains exemption for farmers, fishers and incorporated small business increases to $750,000 for dispositions after March 19, 2007 – CGE will be essentially pro-rated for the 2007 year
• Working income tax benefit (WITB) – refundable tax credit for each dollar of earned income in excess of $3,000 up to a maximum of $500 for individuals and $1,000 for families
• WITB for persons with disabilities – persons eligible for the Disability Tax Credit (DTC) and have earned at least $1,750, income will be supplemented up to $250 and reduced by net family income in excess of $12,833 for individuals and $21,167 for families
• Registered disability savings plan – based on RESP design – i.e. – investment income will accrue tax free – lifetime maximum of $200,000 – will qualify for matching grants (Canadian disability savings bonds paid up to $1,000 paid annually when family income does not exceed $20,833, lifetime limit of $20,000) — capital will not be taxed on withdrawal, only the income portion
• Elimination of capital gains tax on donations of publicly-listed securities to private foundations
• Annual limit of $4,000 for RESP contributions is eliminated, lifetime contribution increased to $50,000
• Canada education savings grants up from $400 to $500
• Full exemption of all scholarship income (i.e. elementary and high school)
• Northern residents deduction expanded to include Municipality of MacKenzie in BC
• Meal expenses for long haul truckers (specific definition of long haul drivers) from 50 per cent to 80 per cent deductible – over 5 years – to 60 per cent after March 19, 2007, 65 per cent, 70 per cent and 75 per cent during 2008, 2009 and 2010, respectively; anything after 2010 will be 80 per cent
• Beginning 2008 phased in retirement – employees can received up to 60 per cent of accrued pension benefit as well as continue to accrue additional pensionable service – workers must be at least 55 and otherwise entitled to receive the pension without incurring an early retirement reduction
• Age limit for maturing registered pension plans (RPP’s) and registered retirement savings plans (RRSP’s) raised from 69 to 71 years
• Qualified investments for registered savings vehicles expanded
• Extend 15 per cent mineral exploration tax credit another year to March 31, 2008
• Double the amount of goods that can be imported duty free from $200 to $400 after 48 hours
• $3,000 net personal tax threshold under which individuals do not have to remit installments (2008 and subsequent years)
• Canada-US tax treaty – elimination of withholding tax on interest – other measures as well
• $2,000 per vehicle to buyer of fuel efficient vehicles – “green levy” for gas guzzlers, scrappage programs for older vehicles

Business

Manufacturing and processing

• Capital cost allowance (CCA) for buildings used in M and P - CCA will increase to 10 per cent from 4 per cent - required usage is 90 per cent must be M and P
• CCA on machinery and equipment purchased after March 19, 2007 and before 2009 will qualify for CCA rates that will allow for a complete w/off over two years (50 per cent straight line)

All business

• CCA for computers up from 45 per cent to 55 per cent
• Non-residential CCA rates for buildings increased from four per cent to six per cent (must be 90 per cent non-residential)
• Buildings will have to be placed into a different class or the current treatment will continue
• Accelerated CCA rates for clean and renewable energy equipment
• 25 per cent tax credit to businesses that create new childcare spaces up to a maximum of $10,000
• Reduce federal paper burden by 20 per cent by November 2008
• Quarterly corporate income tax installments for qualifying Canadian-controlled private corporations (CCPC’s) (taxable income of preceding year cannot exceed $400,000)
• Increase corporate income tax threshold where companies can remit quarterly to $3,000
• $3,000 average monthly withholdings below which a business can remit quarterly rather than monthly
• $3,000 net GST threshold below which business can remit annual returns
• $1.5 million taxable supplies (sales) below which business can remit annually
• Temporary foreign worker program improvements to reduce delays and respond to shortages

Agriculture

• Double the amount of interest free advances available to farmers
• Replace top tier of Canadian Agricultural Income Stabilization program with new savings program to be shared 60:40 with the provinces – government contributions and income earned on government contributions will only be taxable to farmers upon withdrawal
• There will be two separate payments to producers – one time payment into the new savings accounts and an immediate payment to assist with rising production costs

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