With the changing of the guard in Government comes the expectation of tax changes that sometimes are favorable to the average Canadian and other times are quite unfavorable. This past year as a pleasant surprise, the 2006 Budget boasted many favorable changes that will allow Canadian families, students, workers and seniors to keep more of their hard-earned money in 2006 and 2007. In a recent press release the government provided a summary of the substantial and immediate tax relief measures that were made.
Budget 2006 personal tax relief measures which will have an immediate impact on Canadians, include:
ü A 1-percentage-point reduction in the goods and services tax (GST) beginning on July 1, 2006. This benefits all Canadians, including those who do not earn enough to pay personal income tax.
ü Increasing the basic personal amount-the amount that an individual can earn without paying federal personal income tax-so that it grows each and every year and remains above previously legislated levels in 2006 and 2007. The basic personal amount will be $8,929 in 2007 and will continue to increase incrementally, reaching at least $10,000 in 2009.
ü Permanently reducing the lowest personal income tax rate from 16 per cent to 15.5 per cent effective July 1, 2006.
ü Providing all Canadians a break on work-related expenses under the new Canada Employment Credit. This measure took effect July 1, 2006, and recognizes the cost of work-related expenditures such as home computers, uniforms and supplies.
ü Creating a Children’s Fitness Tax Credit to cover eligible fees up to $500 for enrolment in a physical activity program, effective January 1, 2007.
ü Providing students with a new textbook tax credit, effective January 1, 2006, to provide better tax recognition for the cost of textbooks for students.
Minister Flaherty’s contends that while he feels great strides have been made Canadians still pay too much tax, and our government will continue to look at new ways to ease the tax burden and create a real Canadian tax advantage.