Tax Breaks Coming Your Way In 2007
Posted December 31, 2006 12:00 pm.
This article is more than 5 years old.
The Conservatives included $20 billion in tax breaks in their 2006 budget and they recently announced other changes. Those adjustments will result in some savings which will be modest for most but significant for families.
The adjustment you may feel the most is the change to the Employment Tax Credit, which will increase to $1,000 up from $250 for the 2006 tax year. This benefit is meant to help employees cover expenses such as home computers, uniforms and supplies.
This is also accompanied by a slight decrease in Employment Insurance premiums (see below).
Prime Minister Stephen Harper’s government rolled out a number of fiscal initiatives in 2006 meant to save you money, including their childcare benefit, children’s fitness credit, income splitting for seniors, and a tax credit for public transit users.
While all Canadians can expect to save some money, the Canadian Taxpayers Federation says the benefits vary greatly depending on the demographic you fit into.
“All taxpayers will pay less tax in the New Year,” said CTF federal director John Williamson.
“The new employment tax credit will increase to $1,000 … this fourfold increase permits the finance minister to truthfully assert taxes are going down even though Canadians will pay more payroll taxes next year and the lowest personal income tax rate will rise a quarter-point to 15.5 percent from 15.25 percent.”
“Low-income individuals, earning less than $25,000 annually, benefit the most from Ottawa’s new employment tax credit. Also noteworthy are that the larger tax savings for individuals earning $80,000 is due to indexation and how unevenly families with similar income levels are taxed,” said Williamson.
Someone earning $15,000 annually can expect to see $126 in savings, $45,000 will save $106 and if your income is $80,000 you should expect to save $232.
An Ontario family with two kids and a combined income of $80,000 should see $882 in savings while a family with two kids and a single earner bringing home $80,000 will save $1,224.
Here’s a closer look at some of the other tax benefits:
Childcare Benefit: $100 (before tax) a month for each child under six. This is the Conservative plan to replace the Liberals proposed $5-a-day national childcare program.
Children’s Fitness Credit: Up to $500 in eligible fees for any child under 16 involved in programs for physical activity.
Public Transit Credit: Tax credit for anyone who regularly uses public transit.
Student Tax Credit: $500 credit for post-secondary students to help cover the cost of textbooks.
Income Splitting for Seniors: Seniors will be able to split their retirement incomes. Up until now this was only allowed for pension payments and spousal RRSPs.
EI Premium Rates To Go Down: The rates will drop by seven cents to $1.80 per $100 of insurable earnings. The maximum insurable earnings will rise to $40,000 from $39,000.
To see a chart on how these tax changes will affect you and to read the Canadian Taxpayers Federation response to them, click here.
For a closer look at the Conservatives’ tax cuts, click here.
