As the residents of Vegreville–Wainwright have gone about their day-to-day shopping so far in 2008, they may have noticed a drop in the prices they are charged at the till. That is because as of January 1, 2008, GST has been reduced to only 5%. This reduction is only one of a host of tax cuts that have been made by the Conservative government since taking office, just two years ago. In total the government has taken action that will by 2012-2013, reduce the overall tax burden for Canadians and businesses by about $200 billion – its lowest level in nearly 50 years.
Sales and Excise Taxes
- Reduction of the GST to 5% from 6% and 7%, effective January 1st, 2008.
- An increase in the traveller’s exemption for returning Canadians who are out of the country for 48 hours or more to $400 from $200 from March 20, 2007
- Personal Income Tax
- Reduction in the lowest personal income tax rate to 15% from 15.5% as of January 1st, 2007. This applies to the first $37,178 of earnings
- An increase in the amount Canadians can earn without paying federal income tax to $9,600 for 2007 and 2008 and to $10,100 for 2009.
- Introduction of the Working Income Tax Benefit, a refundable tax credit worth up to $500 per year for individuals and $1,000 per year for families that will improve incentives to work for low income Canadians and to lower the welfare wall.
- Increase in the lifetime capital gains exemption for capital gains realized on the disposition of qualified farm and fishing property or qualified small business corporation shares to $750,000 from $500,000.
- Beginning 2008, phased retirement programs can be offered through which an employee will be allowed to receive pension benefits from a defined benefit registered pension plan while simultaneously accruing further benefits.
- Increase in the age limit for the maturation of a registered retirement savings plan from 69-71.
- Introduction of a Registered Disability Savings Plan to provide parents of persons with disabilities greater peace of mind regarding the financial securtty of their loved ones when they can no longer care for them.
- A new $2,000 child tax credit, which will provide tax relief up to $300 per child.
- Elimination of the marriage penalty with an increase in the spousal and other amounts to provide up to $303 of tax relief for a supporting spouse of single taxpayer who is supporting a child or relative.
- Elimination of the annual contribution limit to the registered education savings plan program (RESP).
- Increase in the lifetime limit RESP contributions to $50, 000 from $42,000.
- Increase in the maximum Canada Education Savings Grant per beneficiary to $500 from $400.
- New Exemption of elementary and secondary school scholarships from taxation
- Reduction of the general federal corporate tax rate to 15% from 22.12% by 2012, with a reduction to 19.5% effective in 2008. This will give Canadian corporations the lowest tax rate in the G7.
- Reduction of the small businesses tax rate from 12% to 11%
- Introduction of a special two-year 50% straight-line capital cost allowance rate, to enable manufacturing and processing businesses to write off their capital investments in machinery and equipment faster
