Tax Breaks for Families in Canada’s New Budget

Canada’s new minority government presented its first federal budget last week with tax breaks for families that include a universal child care allowance and a reduction in the goods and services tax (GST) from 7 percent to 6 percent. “The overall impact is savings of some extent, but not major savings,” said Jack Mintz, professor of accounting at the University of Toronto, according to CANOEMoney.com.


Advertisement



Over 400,000 customers use Monarch to transform any report into live data. No more re-keying data into spreadsheets, no need for IT help! Download our white paper today!


With the universal child care allowance provision, Stephen Harper, the new Conservative Prime Minister, made good on a campaign promise to pay Canadian families $100 per month for each child under the age of 6, leaving it up to the family to decide how to spend the money, the Associated Press reports. This is considered a boon to families with one wage earner. The program will replace an existing $4.5 billion child care program put in place by the Liberals.

The Canadian Institute of Chartered Accountants calculates that the child care benefit would generate $836 in savings for two-income families with $30,000 in income and $5,000 in child care expenses, the Toronto Star reports. Two income families spending $5,000 on child care, with combined income of $60,000, would save $706 and two-income families earning $100,000 would save $594. A one income, two-parent family with no child care expense would save $771. A single-parent family making $40,000 would save $642.

The government said that the new child care payments would not affect credits based on income, such as the child tax benefit or the GST credit, CANOEMoney.com says.

The proposed reduction in the GST should cut the anticipated increase in the cost of living by .06 percent, economists Douglas Porter and David Watts of BMO Nesbitt Burns told CANOEMoney.com. “There is likely to be a significant lull in retail sales in the next two months, before the rate is cut, but a major pop in sales in July,” they said.

The budget raises the lowest income-tax rate by half a point, to 15.5 percent, effective July. 1

Other provisions in the budget offer a little something to nearly everybody, CANOEMoney.com says. Commuters who buy annual passes for buses, subways, trains or ferries are eligible for a tax credit of $80 per month. A new tax credit of $500 for textbook costs could yield a full-time student $80 a year, the Finance Department estimates. The conservatives also confirmed existing dividend tax reductions and announced the elimination of capital gains on securities donated to charity.

The new budget proposes raising the threshold for small business income eligible for a reduced federal rate from $300,000 to $400,000, ancasternews.com says. The reduced rate will be cut to 11 percent by 2009.

The Conservatives’ budget must still be approved by the House of Commons.

You may like these other stories...

IRS chief: New rule on the way for tax-exempt groupsIRS Commissioner John Koskinen told the USA Today on Monday that the agency will likely rewrite a proposed rule regulating the political activities of nonprofit groups to...
With tomorrow being Tax Day, you might see some procrastinators at your office filling out forms, printing out paperwork, or getting last-minute tax advice from their accountant so they can meet the IRS’s filing...
The IRS has launched 295 new identity theft and refund fraud investigations during this tax-filing season, bringing the number of active cases to nearly 1,900, the agency announced last week.The coast-to-coast enforcement...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.