Dateline: 03/21/07
Making sure they're ready for an election campaign, the Conservatives used the March 2007 Canadian federal budget to aim directly at suburban middle-class voters. Rather than offering broad-brush tax cuts, the 2007 federal budget provides a collection of tax changes and subsidies for selected groups. As well as the specific tax changes in the 2007 federal budget, the government is proposing a Tax Back Guarantee, dedicating all interest savings from federal debt reduction each year to ongoing personal income tax reductions. Here's a brief summary of many of the personal tax changes included in the 2007 federal budget.
Tax Breaks for Families
- A new child tax credit of $2,000 will provide up to $310 for each child under 18 years of age. It will be effective January 1, 2007.
- The tax credit for a low-income spouse or dependents of single individuals will go up to $8,929 from $7,581, making it the same as the basic personal amount. The amount will grow as currently legislated future increases in the basic personal amount grow.
Tax Breaks for Disabled Children
- A new Registered Disability Savings Plan will be established to help parents and others save money to care for children with severe disabilities.
Tax Breaks for Seniors
- The age credit amount will be increased by $1,000 to $5,066.
- Pension income splitting will be introduced.
- The age limit for converting Registered Retirement Savings Plans will be raised from 69 to 71.
- Phased retirement will be permitted to encourage older workers to stay in the workforce. An employer will be allowed to pay a partial pension to an employee and at the same time provide further pension benefit accruals to the employee.
Tax Breaks for Low Income Canadians
- A new refundable tax credit called the Working Income Tax Benefit will be introduced. It will provide up to $1,000 per year for families or $500 for individuals to help people over the "welfare wall" and strengthen incentives to work for more than 1.2 million low-income Canadians. The Working Income Tax Benefit will be effective for the 2007 tax year, with payments beginning in 2008.
Tax Breaks for Education
- The $4,000 limit on annual contributions to Registered Education Savings Plans will be eliminated, increasing the lifetime contribution limit to $50,000 from $42,000, and extending RESP eligibility to more part-time studies.
- The maximum annual Canada Education Savings Grant will be increased to $500 from $400.
Tax Breaks for the Environment
- The public transit tax credit will be extended to new electronic fare products and weekly passes used on an ongoing basis.
- A performance-based rebate of up to $2,000 per vehicle will be provided to buyers of fuel-efficient vehicles. On the other hand, a Green Levy of up to $4000 will be introduced on new fuel-inefficient vehicles.
Tax Breaks for Travel
- The value of goods that may be imported duty- and tax-free by returning Canadian residents after a 48-hour absence will be doubled from $200 to $400.
