Tuesday, March 20, 2007

Things You Didn't Know about the Canadian Fedral Budget 2007

It was a interesting day yesterday for Canada and the budget (The full document is 478 pages). I personally got a bunch of goodies which I liked, such as:

- Child Tax Credit of $2000 per kid (P.226 - Bottom)
- Increased funding the RESP matching program and raising the maximum total contributions to $50,000 (P.22- Bottom)

Seniors also did well with the previously promised pension splitting, increased age deduction (up $1000) (P.25 for both), and two extra years on the age limit to convert RRSP's (P.231). All of these measures should make retirement a lot happier for a lot a baby boomers entering their golden years soon.

Yet the three things I find the most interesting in the budget was barely mention if at all in the media. The first one I won't blame people if they forgot about it, but now that the Bloc has promised to support the budget bill the income trust lobby is now officially dead. Tucked WAY back in the end of the budget document (P.442) is the statement that the government will proceed with the previously announced 'Tax Fairness Plan" which will see income trusts taxed in four years. So for anyone with the faint hope that things would change. Sorry the free ride is over in a few years.

The second very interesting piece of news that again isn't getting a lot of media attention is the fact the government is going to form a national security commission (P.179). Basically the federal government got tired of waiting for the individual commissions to do anything and is going to force them to merge. So Canada is finally getting off of a very short list of countries that lack a national security commission, which should hopefully reduce red tape for investors who get ripped off and also provide a clearer set of national rules on investment information.

Then there is the third piece of news that I read in an obscure part of the budget document was the reduction of red tape for small business owners by up to 20%(P.183). My wife's business manages to be small enough to avoid much of the red tape, but it is nice to know that she can grow it a bit more before hitting paying tax in installments.

Despite the length of the document it's a fairly organized, so I suggest you download a copy and skim the introductions to each section where they highlight the changes. You might find some minor but useful things that will help you personally.

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