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Discussion, Wednesday

The budget and you

Continued from Page 1

Personal Income Tax Relief for Seniors — Example Winston and Olivia are a senior couple receiving $65,000 and $20,000 respectively in pension income. In the absence of the measures taken by the Government, they would have paid $13,636 in federal personal income taxes in 2009. Tax relief specifically targeted to seniors and pensioners, such as the 2006 increase in the Age Credit, the doubling of the pension income credit and pension income splitting, reduced their personal income taxes by $1,769. Winston and Olivia also benefit from $393 in other personal tax relief, introduced since 2006, such as the reduction of the lowest personal income tax rate. As a result of these measures, their federal personal income taxes in 2009 have been reduced by 16 per cent, or $2,162. In addition, the increase in the Age Credit amount in Budget 2009 will reduce their taxes by $300, and other personal tax reductions in this budget will provide a further $331 in tax relief. In total, their federal personal income taxes in 2009 will be reduced by 20 per cent, or $2,793.

Only the last two items are in Budget 2009. Therefore, in this example the couple are only saving $631 as a result of the new budget not $2,793 as claimed.

It seems like an attempt to confuse seniors by including measures from 2006.

Trent Henry: The examples given in the budget documents cover changes made by the government since 2006. You are correct - the changes made solely in budget 2009 result in savings of $631. Generally, it would appear that the government has consistently continued to take measures that are aimed at benefitting seniors.

Trent Henry adds: We have just learned from a delayed press conference this morning, Liberal Leader, Michael Ignatieff indicated that the Liberals will support the budget but will move an accountability amendment this afternoon that would require the Conservatives to release regular status reports on the economy and the budget measures, starting in March.

Cathryn Motherwell: Would you please outline the things we should watch for as we ponder some renovations to take advantage of the temporary home renovation tax credit?

Trent Henry: Proving that it was used for home renovation, collecting all your receipts to document the renovation. If you're using a relative to do the work, you have to ensure that the individual is registered for GST. Another point to watch out for - if you've already got an agreement under way, you should consider your options in terms of a new agreement.

Cathryn Motherwell: Would you please summarize the tax benefits to low and middle-income earners?

Trent Henry: An individual earning $40,000 will save $115. That breaks down into $33 for the increase in the basic personal amount; $82 relates to the increase in threshold for the first tax bracket.

If the person is a single senior, they would save an addditional $150 in relation to the increase in the age credit.

A single parent with one child earning $20,000 would receive $539 as an additional working tax benefit.

Cathryn Motherwell: What about the provisions to help small business owners? What kinds of things in this budget should they key on?

Trent Henry: For incorporated small business owners, the most significant proposal includes an increase in the amount of income eligible for the lower small business rate (up from $400,000 to $500,000).

In addition, all business owners benefit from the accelerated capital cost allowance changes (including manufacturing and processing equipment, as well as computer hardware and system software).

Cathryn Motherwell:

Were there tax measures that you expected to see in the budget, such as the much-talked-about interest deductibility plan?

Trent Henry: Given the pre-budget leaks and the focus on infrastructure spending, we were not expecting much in the way of either personal or business tax measures. However, there are a number of significant legislative matters that we expect the government will deal with in upcoming technical bills. No time frame was provided by the government for these measures. These include corporate measures dealing with such things as international taxation and conversions of SIFTs (income trusts) among other things.

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