A Continuing Record of Tax Relief

Transcription

1 A Continuing Record of Tax Relief JUNE 2009

2 A Continuing Record of Tax Relief JUNE 2009 Government of Canada Gouvernement du Canada

3 Her Majesty the Queen in Right of Canada (2009) All rights reserved All requests for permission to reproduce this document or any part thereof shall be addressed to Public Works and Government Services Canada. Cette publication est aussi disponible en français. Cat. No.: F2-189/ E ISBN

4 A Continuing Record of Tax Relief Canada s Economic Action Plan Many Canadian communities, businesses and workers have been seriously affected by the economic slowdown. That is why our Government brought forward Canada s Economic Action Plan. It is a clear blueprint to stimulate the economy, protect Canadian jobs and support those hit hardest. It is delivering $62 billion in stimulus, among the largest of the Group of Seven (G7) economies. The Government is delivering on Canada s Economic Action Plan today, when it is needed the most. It will provide a boost to output and employment. It is an investment in our future. The Plan: Reduces taxes permanently. Helps the unemployed through enhanced Employment Insurance and training programs. Avoids layoffs by enhancing the Employment Insurance work-sharing program. Creates jobs through a massive injection of infrastructure spending. Helps create the economy of tomorrow by improving infrastructure at colleges and universities and supporting research and technology. Supports industries and communities most affected by the global downturn. Improves access to and the affordability of financing Canadian households and businesses. 3

5 Canada s Economic Action Plan Tax reductions are an essential element of Canada s Economic Action Plan. They support Canadian businesses and jobs in the short term by providing up-front stimulus, which helps individuals and businesses to weather the global recession, and also create a long-term advantage for sustained economic and employment growth. The Plan includes measures that will reduce the tax burden for Canadian families and businesses by more than $20 billion over and the following five fiscal years. Tax Relief for Canadians Canada s Economic Action Plan provides tax relief to Canadians by: Increasing the basic personal amount and the top of the two lowest personal income tax brackets. This allows Canadians to earn more income before paying federal income taxes or before being subject to higher tax rates. Effectively doubling the tax relief provided by the Working Income Tax Benefit (WITB). This encourages low-income Canadians to find and keep a job. Increasing the Age Credit amount by $1,000. For low- and middleincome seniors, this means additional annual tax savings of up to $150, making retirement more affordable. To make raising children more affordable, the Plan also announced an increase in the income level at which the National Child Benefit Supplement for low-income families and the base benefit of the Canada Child Tax Benefit are phased out. 4

6 A Continuing Record of Tax Relief Canadians are already benefiting from many of these measures: Individuals have been seeing the benefits of income tax reductions on their paycheques since April Increased child benefits will start to flow in July, providing up to $436 for a family with two children. Tax relief for low- and middle-income seniors has been put in place, providing up to an additional $150 in annual tax savings. The Government expects that low-income working Canadians will receive benefits from the enhanced WITB when they file their 2009 tax returns. Canada s Economic Action Plan: Tax Relief for Canadians Personal Tax Relief for Canadians Beverly earns $35,000 and is a single parent of two children. In total, her personal income taxes have been cut by three-quarters, or $1,216, and she receives an additional $436 in child benefits, making her $1,652 better off. Personal Tax Relief total relief (dollars) 1,800 1,600 $1,652 1,400 1,200 $1,150 1, $ Economic Action Plan Previous actions Total 5

7 Canada s Economic Action Plan Canada s Economic Action Plan: Tax Relief for Canadians Personal Tax Relief for Canadians Matthew and Giuliana have two children, and Matthew s income is $90,000. In total, their personal income taxes have been cut by 11 per cent, or $1,532, and they receive $76 in additional child benefits, making them $1,608 better off. Personal Tax Relief total relief (dollars) 1,800 1,600 $1,608 1,400 1,200 $1,182 1, $ Economic Action Plan Previous actions Total These tax changes will put money back in the pockets of Canadians, boosting confidence and encouraging spending, which is critical to the retail sector and Canada s overall economic recovery. Diane J. Brisebois, President and CEO, Retail Council of Canada, January 28,

8 A Continuing Record of Tax Relief Support for Home Ownership and the Housing Industry Canada s Economic Action Plan provides up to $7.8 billion over two years to support homeowners and the housing industry, while protecting and creating jobs. These measures are already delivering benefits to Canadians. The stimulus incentives of the temporary Home Renovation Tax Credit (HRTC) are helping to sustain the housing industry during the global economic recession. The Government expects the 15-per-cent HRTC to provide an estimated $3 billion in tax relief to about 4.6 million Canadian families. In addition, two other measures are also available for the 2009 and future tax years: To provide first-time home buyers with additional access to their Registered Retirement Savings Plan savings for purchasing or building a home, the Home Buyers Plan (HBP) withdrawal limit has been increased to $25,000 from $20,000, the first increase in the withdrawal limit since the HBP was introduced in To assist first-time home buyers with the costs related to the purchase of a home, the First-Time Home Buyers Tax Credit is now providing up to $750 in tax relief. 7

9 Canada s Economic Action Plan Thanks to the Economic Action Plan: All Action Plan measures supporting home renovations and improvements are already delivering benefits to Canadians and creating activity and jobs in the housing industry. The Canada Revenue Agency has received over 700,000 HRTC-related enquiries through its website and by telephone, and high-profile advertising campaigns undertaken by major building material suppliers and retailers have also helped increase awareness of the HRTC. Tax Relief to Stimulate Business Investment The measures contained in the Economic Action Plan build on the Government s record of continuous tax relief, enabling Canadian businesses to emerge stronger and better equipped to compete worldwide as the global economy recovers. Reducing Taxes for Small Businesses The Economic Action Plan strengthens the Government s effort to support the growth of Canada s small businesses. Canada s Economic Action Plan increased the amount of small business income eligible for the reduced federal income tax rate of 11 per cent to $500,000 from $400,000. This higher threshold will help small businesses retain more of their earnings for reinvestment and put them in a position to succeed despite today s uncertainty. This increase has been in effect since January 1,

10 A Continuing Record of Tax Relief Extending Assistance for Canada s Manufacturing and Processing Industries There are special challenges facing Canada s manufacturing and processing industries, and our Government has taken steps in Canada s Economic Action Plan to help. The Plan extended the temporary 50-per-cent straight-line accelerated capital cost allowance (CCA) rate to investments in manufacturing or processing machinery and equipment made in 2010 and Manufacturers and processors are already benefiting from this measure, which was introduced in Budget 2007 and extended in Budget Temporary 100-Per-Cent Capital Cost Allowance Rate for Computers To help businesses adopt new technology at a faster pace, the Government introduced a temporary two-year 100-per-cent CCA rate for computers. The measure has been in effect since January 28, Attracting New Investment Tax Rate¹ on New Business Investment in Canada, 2012 per cent United States Second-lowest METR among G7 countries OECD average Canada Prior to the 2006 budget Canada Including measures in 2009 federal and provincial budgets 2 Canada Provincial retail sales tax harmonization plus federal-provincial corporate income tax rates to 25% 3 1 Excludes resource and financial sectors and tax provisions related to research and development. 2 Measures announced as of April 30, 2009, including Ontario's decision to harmonize its retail sales tax with the federal Goods and Services Tax. 3 In the case of New Brunswick, the combined federal-provincial corporate income tax rate is scheduled to be below 25%. 4 Excludes Canada. Source: Department of Finance Canada. 9

11 Canada s Economic Action Plan Collaboration for Improved Business Tax Competitiveness In addition to the significant federal tax relief introduced to position Canadian businesses for success, our Government is working with provinces and territories to put the country s businesses in a more competitive position as the economy recovers. Areas of focus include: Encouraging provincial and territorial governments to reduce their corporate income tax rates to achieve a combined federal-provincialterritorial statutory tax rate of 25 per cent by 2012, and to eliminate their capital taxes. Several provinces have acted to enhance Canada s business tax advantage by doing just that, building on significant actions already taken at the federal level. Harmonizing provincial retail sales taxes with the federal Goods and Services Tax. Ontario s 2009 budget announcement to join the Harmonized Sales Tax Framework represented a significant step forward. Ontario s plan will double the proportion of the Canadian economy that is free from sales tax on business inputs, with 80 per cent of the economy operating in this more business-friendly tax environment. As a result of the corporate income tax reductions introduced since 2006, Canada will have the lowest statutory tax rate in the G7 by 2012 and will reach the goal of the lowest overall tax rate on new business investment in the G7 by Canada s Business Tax Advantage As a result of the tax relief introduced by this Government, Canada is better positioned than most to withstand the effects of today s global economic challenges. At the same time, lessening the tax burden on Canadian businesses builds a solid foundation for future economic growth and higher living standards for Canadians. Substantial, broad-based tax reductions are lowering the general corporate income tax rate from per cent (including the corporate surtax) in 2007 to 15 per cent by 2012 to strengthen Canada s business tax advantage. 10

12 A Continuing Record of Tax Relief For more information on Canada s Economic Action Plan, visit or call O-Canada ( ) (TTY) 11