Tax season is upon us once again. Our Government has worked hard over the last two years to deliver significant tax savings for all Canadians, especially for when we are all completing our individual income tax and benefit returns. For 2007, there are several new benefits and credits that can help reduce the amount of tax you pay. Our Government wants you to know about these many changes and I would like to use this week’s journal to make you aware of what’s available to you.
Firstly, there have been many changes made to the amounts used in calculating your federal non-refundable tax credits. The basic personal amount has increased to $9,600. Individuals with taxable income in 2007 up to this amount will not have to pay federal income tax. You may be able to claim the spouse or common-law partner amount if, at any time in the year, you supported your spouse or common-law partner and his or her net income for 2007 was less than $9,600. You may be able to claim an eligible dependant, if at any time in the year, you supported an eligible dependant whose net income was less than $9,600. You may also be able to claim $2,000 for each of your or your spouse’s or common-law partner’s children (born in 1990 or later), if they lived with you throughout 2007 and were under the age of 18 at the end of the year.
The Children’s Fitness Tax Credit is a new credit for the 2007 tax year. It is a non-refundable tax credit based on eligible fitness expenses paid by parents to register a child in a prescribed program of physical activity. The children's fitness tax credit allws parents claim up to $500 per year for eligible fitness expenses paid for each child who is under 16 years of age at the beginning of the year in which the expenses are paid.
The Public Transit Tax Credit is also new for 2007. Individuals can claim the the cost of monthly or longer duration public transit passes for travel within Canada. The cost of shorter duration passes can also be claimed if each pass entitles the user to unlimited travel for an uninterrupted period of at least five days and the user purchases enough of these passes so that they are entitled to unlimited travel for at least 20 days in any 28-day period. Individuals can also claim the cost of electronic payment cards when used to make at least 32 one-way trips during an unterrupted period not exceeding 31 days.
Another new change for the 2007 tax season is pension income splitting. Eligible individuals may be able to allocate up to half of their pension income that qualifies for the pension income tax credit to their lower-income spouse or common-law partner.
Long-haul truck drivers will also note a new change for 2007, as the deductible part of certain meal and beverage expenses incurred during an eligible travel period after March 18, 2007, has increased.
Senior citizens can also benefit from the increased age limit (from 69 to 71) for contributing to a Registered Retirement Savings Plan (RRSP).
Individuals and families with low incomes may be able to claim the Working Income Tax Benefit (WITB), which includes a supplement for individuals who are entitled to the Disability Tax Credit. Eligible individuals and families can also apply for advance payment of up to one half of their estimated 2008 WITB using Form RC201,
Working Income Tax Benefit Advance Payments Application for 2008.
For a full list of tax changes, please visit What’s New for 2007 on CRA’s website (www.cra.gc.ca) or see your General Incme Tax and Benefit Guide for 2007. For more information on tax topics, please feel free to call the individual income tax enquiries line at 1-800-959-8281.