Notable Canadian Tax Law Changes
The Government of Canada continues to make small but significant reductions in federal income tax, while targeting families and seniors for special tax relief.
Income Tax Reductions
The lowest personal income tax rate has been reduced from 15.5% to 15%.
Certain non-refundable tax credits have increased: the "Basic Personal Amount," "Spouse or Common-law Partner Amount," and "Amount for an Eligible Dependant" have all gone up to $9,600.
Tax Relief for Seniors
The much-anticipated pension income splitting provision comes into effect in 2007. Recipients of certain types of pension income will now be permitted to share that income between spouses, which should provide savings on a couple's overall tax bill. More Information.
Tax Relief for Families
Elementary and secondary school scholarships and bursaries are no longer taxable.
There is a new non-refundable tax credit called the "Amount for Children Born in 1990 or Later." You can claim $2,000 for each of your children under 18 years old at the end of the year, and you may be able to transfer this amount to your spouse. The new credit is claimed on Line 326 of Schedule 1 (which for some reason has been sandwiched in between Lines 305 and 306).
The Canada Employment Amount has increased from $250 to $1,000.
For all those parents who diligently saved their children's fitness receipts in 2007, you can now claim the new "Children's Fitness Credit" for fees paid to register your child in a prescribed fitness program, up to a maximum of $500 per child. Your child must have been under 16 at the beginning of the year. More Information.
GST Reduction
A tax measure to benefit all Canadians: the GST rate will be reduced from 6% to 5% on January 1, 2008. Note that if you live in New Brunswick, Nova Scotia, or Newfoundland and Labrador, the provincial tax (HST) remains at 8%. More Information.
Installment Payment Threshold Increased
The installment threshold for individuals has increased to $3,000 ($1,800 for residents of Quebec). Certain taxpayers who previously had to prepay their tax throughout the year will now be able to save their installment payments and earn interest on them until tax time! More Information.
Related Websites
Canada Revenue Agency revised it's website in 2007, making it more user-friendly. It is always worth visiting for highlights of Canadian tax changes.
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