Finally, some good news at tax time

April 25, 2007

It’s that time of year again … tax time.

Aside from the chore of getting our tax returns filed by the April 30th deadline, most of us don’t particularly enjoy reviewing how much we paid or owe in federal and provincial taxes. The good news this year is that you’ll be paying less in federal taxes than you normally do.

That’s because many of the personal income tax cuts that the Conservative Government implemented in its first budget last year are now in effect. So as you’re sitting down to file your income tax return, or handing over your slips and receipts to someone who prepares your return for you, keep in mind the following new credits and deductions.

The lowest personal income tax rate has been permanently reduced to 15.5 percent from 16 percent.

The basic personal amount has increased to $8,839. That’s the amount an individual can earn without paying federal personal income tax.

The new Canada Employment Credit of $1,000 gives every employee a tax break.

For pensioners, the amount of eligible pension income that can be used in calculating the pension income credit is DOUBLED.

The public transit tax credit means you can claim a credit on the cost of your monthly or annual bus passes.

Employed tradespeople can now claim a deduction of up to $500 for the cost of tools in excess of $1,000 that they must buy for their job.

Self-employed Canadians can now write-off up to $500 in tools under the 100-percent capital cost allowance rate.

The new textbook tax credit for post-secondary students has kicked-in.

Post-secondary scholarship and bursary income are now fully exempted from income taxes.

The maximum refundable medical expense supplement has been increased to $1,000.

For Canadians who invest, the tax rate on large corporation dividends has been reduced.

These are just some of the measures to benefit individual taxpayers as they file their 2006 tax return. Next year, as you file your 2007 income tax return, the wave of Conservative tax cuts will continue.

Seniors will benefit from pension-income splitting and an increase in the age amount. The Children’s Fitness Tax Credit is now in effect. There will also be a $2,000 tax credit for every child under 18. The basic personal amount will increase again, and the basic spousal amount will match it, meaning an end to the so-called “marriage penalty”.

Since taking office, the Conservative Government has introduced nearly $38-billion in individual tax relief. So what does this mean? A one-earner family earning $30,000 with two children will see a 93 percent tax cut. For a two-earner family with a combined income of $40,000 with two children, the tax cut is 92 percent or 25 percent if the combined income is $60,000. A two-earner senior couple earning $40,000 will see a 40 percent reduction in federal taxes.

The Conservative Government knows Canadians still pay too much tax. So while we’ve gotten off to a quick start in reducing your tax burden, we know there’s much more to be done!