Tax Relief Provided Since 2006

Budget 2006

Personal Tax



Reduce the GST rate to 6% from 7%, effective July 1, 2006



Reduce lowest personal income tax (PIT) rate to 15.5% from 16%, effective July 1, 2006¹



Increase the basic personal amount to $8,648 from $8,148 for 2005, to $8,839 from $8,428 for 2006, to $8,929 from $8,713 in 2007, to $9,299 from $9,278 in 2008, and to $10,131 from $10,110 in 2009²



Introduce the Canada Employment Credit, effective July 1, 2006 (up to $1,000 in 2007, first full year) ³



Introduce deduction of cost of tools for tradespeople (up to $500 for costs in excess of $1,000)



Introduce a Textbook Tax Credit (amount up to $65 per month), effective 2006



Exempt post-secondary scholarship and bursary income from tax, effective 2006



Introduce Children's Fitness Tax Credit (recognizes up to $500 in eligible fees), effective 2007



Double amount of income eligible for the Pension Income Credit to $2,000 from $1,000, effective 2006



Extend the 15% mineral exploration tax credit to March 31, 2007



Reduce tax on large corporation dividends (increase gross-up to 45% from 25% and dividend tax credit to 19% from 13.3%), effective 2006



Increase the maximum Refundable Medical Expenses Supplement to $1,000 from $767, effective 2006



Introduce the Public Transit Tax Credit, effective July 1, 2006



Eliminate capital gains tax on donations of shares and ecogifts to public charities



Extend $500,000 lifetime capital gains exemption and intergenerational rollover to fishing property



Reduce the Right of Permanent Residence Fee to $490 from $975



Repeal excise tax on jewellery

Business Tax



Reduce the general corporate income tax rate to 20.5% for 2008, to 20% for 2009 and to 19% for 2010 from 21% for 2007⁴



Eliminate the corporate surtax for all corporations in 2008



Increase the income limit for the small business tax rate to $400,000 from $300,000, effective 2007



Reduce the small business tax rate to 11% in 2009 from 12% in 2007⁵



Introduce the Apprenticeship Job Creation Tax Credit (10% of wages, to maximum credit of $2,000 per apprentice per year)



Increase the cost limit for tools qualifying for 100% capital cost allowance (CCA) to $500 from $200



Eliminate federal capital tax in 2006 (two years earlier than originally scheduled)



Extend carry-forward periods for non-capital losses and unused investment tax credits (ITCs) to 20 years from 10 years⁶



Increase the threshold above which the financial institution capital tax begins to apply to $1 billion from $200 million



Extend eligibility for accelerated CCA under Class 43.1 (30% rate) and Class 43.2 (50% rate) to forestry bioenergy



Reduce the excise duties on certain wines and beer to support vintners and small- and medium-sized brewers, effective July 1, 2006

Tax Fairness Plan 2006

Personal Tax



Increase the Age Credit amount to $5,066 from $4,066, effective 2006



Introduce pension income splitting, effective 2007

Business Tax



Reduce general corporate income tax rate by 0.5% to 18.5% in 2011

Budget 2007

Personal Tax



Introduce the Working Income Tax Benefit, effective 2007



Eliminate the capital gains tax on charitable donations to private foundations



Exempt elementary and secondary school scholarship income from tax*



Introduce the Child Tax Credit (initial amount of $2,000), effective 2007



Increase the spousal and eligible dependant amounts to $8,929 from $7,581, effective 2007



Extend the Public Transit Tax Credit to electronic and weekly passes



Increase the lifetime capital gains exemption to $750,000 from $500,000  



Gradually increase the deduction for meal expenses of truck drivers from 50% of the allowable amount in 2006 to 80% in 2011⁷



Provide more flexibility to employers to offer phased retirement programs*



Introduce the Registered Disability Savings Plan (RDSP), effective 2008*



Increase the age limit for maturing Registered Pension Plans (RPPs) and Registered Retirement Savings Plans (RRSPs) to 71 years of age from 69 



Expand RRSP qualified investments*



Broaden the northern residents deduction to include the District Municipality of Mackenzie (British Columbia)*



Increase the 48-hour travellers' exemption to $400 from $200



Extend the 15% mineral exploration tax credit to March 31, 2008



Introduce zero-rating for GST/HST purposes for exports of intangible personal property⁸*

Business Tax



Extend eligibility for accelerated CCA for clean energy generation



Reduce the frequency of tax remittances and filings for small businesses⁹*



Introduce a farm savings account (AgriInvest)



Introduce temporary accelerated CCA for manufacturing and processing (M&P) machinery and equipment



Increase CCA rates for manufacturing plants (to 10% from 4%), other non-residential buildings (to 6% from 4%), computers (to 55% from 45%), natural gas distribution lines (to 6% from 4%) and liquefied natural gas facilities (to 8% from 4%)



Encourage the elimination of provincial capital taxes



Eliminate non-resident withholding tax on arm's length interest payments¹⁰



Introduce a 25% investment tax credit for child care spaces up to a maximum credit of $10,000 per child care space created



Introduce a special additional deduction for the donation of medicines for the developing world



Introduce GST relief in respect of certain property and services used in the course of foreign conventions held in Canada and the accommodation portion of tour packages for non-residents



Introduce a tax relief package with respect to the 2010 Olympic Games

2007 Economic Statement

Personal Tax



Reduce GST rate to 5% from 6%, effective 2008



Reduce lowest PIT rate to 15% from 15.5%, effective 2007



Increase the basic personal amount to $9,600 from $8,929 for 2007 and to $9,600 from $9,299 for 2008

Business Tax



Reduce general corporate income tax rate to 19.5% from 20.5% for 2008, to 19% from 20% for 2009, to 18% from 19% for 2010, to 16.5% from 18.5% for 2011 and to 15% from 18.5% for 2012¹¹



Accelerate reducing the small business rate to 11% from 11.5% to 2008 from 2009

Budget 2008

Personal Tax



Introduce the Tax-Free Savings Account, effective 2009



Expand the list of expenses eligible for medical expense tax credit¹²



Extend the Registered Education Savings Plan (RESP) termination date limits¹³*



Allow a six-month grace period for receiving Educational Assistance Payments under an RESP¹³*



Extend the 15% mineral exploration tax credit to March 31, 2009



Increase residency component of the northern residents deduction by 10%, effective 2008



Extend the existing capital gains tax exemption for donations of publicly traded securities to capital gains realized on the exchange of unlisted securities*



Exempt from GST/HST specially designed training to assist individuals in coping with effects of disability or disorder; expand list of GST/HST-free medical and assistive devices (e.g., service dogs) 

Business Tax



Extend temporary accelerated CCA for M&P machinery and equipment announced in Budget 2007 for three additional years (2009-2011)¹⁴



Increases in CCA rate for railway locomotives (to 30% from 15%), CO2 pipelines (to 8% from 4%) and CO2 pumping and compression equipment (to 15% from 4%)



Extend accelerated CCA to include clean energy generation equipment



Improve scientific research and experimental development (SR&ED ) Program (increase in the expenditure limit for the enhanced 35% credit to $3 million from $2 million, increases in the phase-out ranges)



Extend to long term residential care facilities the GST New Residential Rental Property Rebate and GST / HST exempt treatment that applies to residential leases and sales of used residential rental buildings



Extend GST / HST relief to land leased to situate wind- or solar-power equipment for the production of electricity*

2008 Economic Statement

Personal Tax



Introduce temporary 25% reduction in Registered Retirement Income Fund (RRIF) minimum withdrawals for 2008

Budget 2009

Personal Tax



Increase the basic personal amount to $10,320 from $10,100 for 2009



Increase upper limit of the first PIT bracket to $40,726 from $38,832 for 2009¹⁵



Increase upper limit of the second PIT bracket to $81,452 from $77,665 for 2009



Double the total tax relief provided by the Working Income Tax Benefit, effective 2009



Increase the Age Credit amount to $6,408 from $5,408 in 2009



Extend the 15% mineral exploration tax credit to March 31, 2010



Introduce the temporary Home Renovation Tax Credit on expenditures in excess of $1,000, but not more than $10,000



Introduce the First-Time Home Buyers' Tax Credit, based on an amount of $5,000



Increase the Home Buyers' Plan withdrawal limit to $25,000 from $20,000



Introduce tax relief for RRSP post-death losses

Business Tax



Increase the income limit for the small business tax rate to $500,000 from $400,000, effective 2009



Repeal Section 18.2 (Interest Deductibility)



Extend accelerated CCA for M&P machinery and equipment by one year¹⁶



Allow temporary 100% CCA rate for computers



Simplify how GST/HST is applied to direct sellers

Other Off-Budget Tax Relief



Eliminate the excise duty on Canadian wine and provide excise duty relief to all Canadian brewers, announced June 28, 2006 and effective July 1, 2006.



Enhance the child fitness tax credit for children with disabilities by increasing the age limit from under 16 to under 18 years of age and introducing an additional $500 non-refundable amount for DTC-eligible children, announced on December 19, 2006



Exempt GST / HST for midwifery services, announced December 28, 2006



Introduce a new single rebate system for GST/HST paid on any expenses relating to pension plans, similar to the multi-employer pension plan rebate, for all employer-sponsored pension trusts, announced on January 26, 2007



Eliminate tobacco manufacturer’s surtax for tobacco processors, announced February 2, 2007



Improve tax treatment of debt denominated in a foreign currency, announced March 7, 2008



Extend the 2008 deadline for RDSP contributions, announced on December 23, 2008



Introduce modifications to the provisions relating to amateur athletic trusts, announced on December 29, 2008



Extend Drought Regions Measure to Flood Regions, announced March 5, 2009



Increase the pension surplus threshold for defined benefit registered pension plans to 25% from 10%, announced on October 27, 2009

NOTES:

Measures were effective on the day of announcement (e.g., Budget Day) unless otherwise indicated. Relief measures from reductions in trade tariffs are not included.

* These tax initiatives have no significant cost to the Government.

¹ 15% from January 1, 2005; 15.5% from July 1, 2006 (i.e., average rate of 15.25% for 2006 taxation year).

² For 2006, $9,039 for first half of the year and $8,639 for the second half of the year, for an annual average of $8,839. Increases for 2007 to 2009 were modified as a result of the 2007 Economic Statement; $9,600 for 2007 and 2008, and $10,100 for 2009.  The basic personal amount for 2009 was increased to $10,320 for 2009 in Budget 2009.

³ $500 effective July 1, 2006 ($250 for the year). $1,000 for 2007 and indexed for subsequent tax years.

⁴ Further and accelerated reductions were announced in the 2007 Economic Statement.

⁵ 0.5 point reduction to 11.5% January 1, 2008, 0.5 point reduction to 11% January 1, 2009.  The 2007 Economic Statement accelerated the 1-percentage point reduction to January 1, 2008.

⁶Applies to losses incurred and credits earned in taxation years that end after 2005.

⁷ Measure is being phased in.  Deductible portion of meals increases to 60% on or after March 19, 2007, 65% in 2008, 70% in 2009, 75% in 2010, and 80% in 2011 and subsequent years.

⁸ Zero-rating will apply to supplies made after March 19, 2007, and supplies made on or before March 19, 2007 if GST/HST was neither charged nor collected in respect of the supply.

⁹ The quarterly instalments of corporate income tax and the increased corporate income tax payable threshold are available in respect of corporate taxation years that begin after 2007. Increased the taxable supplies threshold, at or below which a registrants can file a GST/HST return annually and increased the net tax threshold, below which annual GST/HST filers can make one remittance; these are in respect of fiscal years that begin after 2007.

¹⁰ Interest payments to unrelated (arm’s length) persons are exempt from withholding tax as of January 1st, 2008 while interest payments to non-arm’s length U.S. persons will be exempted from withholding tax upon ratification of the Canada-U.S protocol.

¹¹ Statutory rate reductions relative to Pre-Economic Statement.

¹² Relieving measures take effect January 1, 2008.

¹³ Rules apply to RESP transactions occurring after 2007, for plans in existence on January 1, 2008 or established after that date.

¹⁴ Eligible assets acquired in 2010 will generally be eligible for a 50% declining-balance rate in the first taxation year ending after the assets are acquired, a 40% declining-balance rate in the following taxation year and the regular 30% declining balance rate thereafter. Eligible assets acquired in 2011 will generally be eligible for a 40% declining-balance rate in the first taxation year ending after the assets are acquired and the regular 30% declining-balance treatment thereafter.

¹⁵ Increases to the Canada Child Tax Benefit (CCTB) and the National Child Benefit supplement (NCBs) result from the legislative link between the NCBs phase-out and the upper limit of the lowest PIT bracket.

¹⁶ A 50% straight-line accelerated CCA treatment will apply in lieu of the accelerated declining basis CCA introduced in Budget 2008 (note 16) for assets acquired in 2010 and 2011.