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Canada’s Conservative Government to Implement Proposed Tax Relief

          The Conservative leadership recently announced its intension to implement the tax relief proposals from its spring 2006 budget.  The government expects that these proposals will provide meaningful tax relief for pensioners, families, students and users of public transit.  It will also provide relief for trades-people, apprentices and fishers. According to a press release issued by the government, small and large businesses will also benefit and “will be better positioned to compete and prosper in the global economy”.

          Below is a list of a few of the changes that may affect you:

1.  The new Canada Employment Credit;

2.  The new Textbook Tax Credit;

3.  The new tax credit for public transit passes;

4.  The new deduction for trades-people’s tool expenses;

5.  100% exemption for scholarship income in specified situations;

6.  The new Children’s Fitness Tax Credit;

7.  The new Apprenticeship Job Creation Tax Credit;

8.  Reduction of the small business tax rate to 11.5 per cent for 2008;

9.  Increase Small Business Income tax exemption rate to $400,000;

            10.  Lower income tax rate on large corporation dividends received by Canadians

          For more information on the proposed changes and/or explanatory notes, please visit the Department of Finance website or call the Department of Finance Distribution Centre at 613-995-2855 for received printed material related to these changes.

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New Tax Collection Agreement for Province

(Department of Finance Press Release)

          Businesses throughout Ontario will benefit from one tax return, one set of rules and one point of contact as a result of a corporate income tax collection agreement signed today by Canada’s New Government and the Government of Ontario.

          "By moving to a single corporate tax collector, we are slashing red tape and reducing up to $100 million in annual compliance costs for Ontario businesses," said the Honorable Jim Flaherty, Minister of Finance. "This agreement means businesses can spend more time focusing on expanding their facilities and markets in this highly competitive global marketplace."

          Minister Flaherty and the Honorable Greg Sorbara, Minister of Finance of Ontario, today signed a Memorandum of Agreement, under which the federal government would collect and administer Ontario’s corporate income tax. Under the agreement, businesses would make combined payments starting in 2008 and file a single return beginning in 2009 for taxation years ending after December 31, 2008.

          "Businesses have been asking us to reduce administrative overlap and duplication," Minister Sorbara said. "When governments work together, we can improve efficiency and help businesses free up resources that they can then invest in creating jobs. That, in turn, creates a stronger, more productive economy, which benefits all Ontarians."

This agreement will reduce compliance costs for businesses and enable the Canada Revenue Agency (CRA) to streamline service and reduce administrative costs. Benefits to Ontario businesses will include:

      • A single tax form.
      • A single tax collector. The CRA will collect both federal and Ontario corporate income tax and administer the province’s capital tax.
      • One set of income tax rules.

          The federal government already collects corporate income tax for seven provinces and three territories. Provisions in the agreement signed today, such as Canada’s enhanced enforcement efforts in the areas of provincial income allocation and inter-provincial tax avoidance, will benefit these provinces and territories.

          "Consolidating corporate tax collection and auditing services is welcome news for the business community, and a move long called for by the Ontario Chamber of Commerce," said Len Crispino, President and CEO of the Ontario Chamber of Commerce. "Today’s announcement will result in increased savings and efficiencies for both business and government, improving the competitive position of our province."

          Copies of the Memorandum of Agreement are available on the Department of Finance website.