2008 Tax Changes


GST Reduction

 
The GST/HST will be lowered by 1% as of January 1, 2008. This will result in the GST rate being 5% and the HST rate will be 13%. The GST credit for low- and middle-income Canadians will remain at its current levels.
 

Personal Income Tax

  • A new $2,000 child tax credit will provide up to $310 per child of tax relief to more than 3 million Canadian families.
  • Ending the marriage penalty by increasing the spousal and other amounts to provide up to $209 of tax relief for a supporting spouse or single taxpayer that is supporting a child or relative.
  • Extending the public transit tax credit to innovative fare products like electronic fare cards and weekly passes when used on an ongoing basis.
  • Increasing the lifetime capital gains exemption for farmers, fishermen and fisherwomen, and small business owners from $500,000 to $750,000.
  • Enacting the Tax Fairness Plan, which delivers over $1 billion in additional tax savings for Canadians including:
    • Increasing the age credit amount by $1,000 to $5,066.
    • Allowing pension income splitting.
  • Encouraging older workers to stay in the labour market by permitting phased retirement. This would allow an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee.
  • Increasing the age limit from 69 to 71 for converting a registered retirement savings plan (RRSP) to strengthen incentives for older Canadians to work and save.
  • Amending the list of qualified investments that can be held by RRSPs and other registered plans to include most investment-grade debt and publicly-listed securities.
  • Increasing the share of meal expenses that long-haul truck drivers can deduct for tax purposes from 50 to 80 per cent.
  • Mini Budget - The basic personal amount was increased from $8,896 to $9,600, retroactive to January 1, 2007. The basic personal amount will increase another $500 to $10,100 in 2009.
  • Mini Budget - The lowest tax bracket has been reduced from 15.5% to 15% retroactive to January 1, 2007.

RESP'S - Education Saving Plans

  • Budget 2007 proposes changes that will provide additional flexibility and encourage greater savings in these plans by:
  • Eliminating the $4,000 limit on annual RESP contributions. 
  • Increasing the lifetime limit on RESP contributions—for the first time since 1996—to $50,000 from $42,000.
  • Increasing the maximum annual amount of CESG that can be paid in any year to $500 from $400 (and to $1,000 from $800 if there is unused grant room from low contributions made in previous years).
  • Each child will continue to be eligible to receive up to $7,200 in CESGs

Reducing Tax Compliance Burden: (for small businesses)

  • To further reduce the paperwork burden of small business, Budget 2007 proposes to allow small businesses to reduce the number of tax remittances and filings by:
  • Introducing quarterly installments of corporate income tax to replace monthly installments for certain small Canadian-controlled private corporations.
  • Increasing to $3,000 from $1,000 the corporate income tax payable threshold, at or below which corporations are eligible to remit annually.
  • Increasing to $3,000 from $2,000 the net personal income tax threshold, at or below which individuals do not have to pay instalments.
  • Increasing to $3,000 from $1,000 the average monthly withholdings threshold, below which businesses may be eligible to remit source deductions quarterly.
  • Increasing to $1.5 million from $500,000 the taxable supplies threshold, at or below which businesses can file a GST/HST return annually.
  • Increasing to $3,000 from $1,500 the net tax threshold, below which annual GST/HST return filers can remit the tax annually.
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