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Federal Budget -> 2006 Budget

Advantage Canada Plan announced November 23, 2006

This plan is a set of goals which includes

bullet eliminating the federal net debt
bullet using the interest savings to reduce personal income taxes
bullet establishing the lowest tax rates on new business investment in the G7

Tax Fairness Plan announced October 31, 2006

bullet age credit increased by $1,000 to $5,066 effective January 1, 2006 - see the 2006 table of non-refundable tax credits
bullet this means that the age credit will not be completely phased out until net income reaches $64,043 for 2006 (was $57,377 previously)
bullet pension splitting - beginning with the 2007 tax year, up to 1/2 of certain pension income may be transferred to a spouse.
bullet income trusts will be subject to corporate income tax rates on certain distributions.
bullet corporate tax rate will be reduced by an additional 1/2% in 2011.

For more information, see the Department of Finance news release.

Federal Budget 2006

The Federal government tabled their budget on May 2, 2006.  See the Archived 2006 Federal Budget on the Department of Finance website.

Bill C-13 was tabled in the House of Commons on May 11, 2006 to implement budget measures set out in the May 9th Notice of Ways and Means motion, as well as certain other measures.  The Bill includes some tax measures that were originally introduced in the 2005 Budget.  Bill C-28 was tabled to implement remaining tax measures not included in Bill C-13.  For more detail, see:

bullet May 9th Notice of Ways and Means Motion
bulletBill C-13 legislative information and status, on the Library of Parliament website - received Royal Assent on June 22, 2006. 
bullet June 15, 2006 news release re Explanatory notes to the Budget Implementation Act 2006 now available
bullet June 29, 2006 - Draft legislation for the enhanced dividend tax credit released
bullet August 31, 2006 - Legislative proposals re remaining Budget 2006 income tax measures
bulletBill C-28 legislative information and status, on the Library of Parliament website - received Royal Assent on February 21, 2007.

Budget highlights:

bullet Apprenticeship job creation tax credit and apprenticeship grants.
bullet Basic personal amounts - will be $8,839 (average) for 2006.  November 2005 budget had proposed $9,039 for 2006.
bullet Canada student loans program - expanded eligibility.
bullet Capital tax - eliminated as of January 1, 2006 instead of 2008.
bullet Child care - Universal Child Care Plan
bullet Child disability benefits enhanced.
bullet Children's fitness tax credit - starting in 2007, non-refundable tax credit for up to $500 of eligible expenses for children under 16.
bullet Corporate tax rate reduction and surtax elimination starting 2008.
bullet Dividend tax credit revised for dividends paid by large Canadian corporations.
bullet Donations of publicly-traded securities and ecologically sensitive lands to charities - elimination of capital gains taxes, effective for donations made on or after May 2, 2006.
bullet Employment credit - on up to $250 of employment income for 2006 (x 15.25%), and up to $1,000 for 2007 (x 15.5%).
bullet Fishers - capital gains - including lifetime capital gains exemption on qualified fishing property.
bullet GST reduced to 6% effective July 1, 2006.
bullet Investment tax credit carry-forward period increased to 20 years for credits earned in taxation years ending after 2005.
bullet Non-capital loss carry-forward period increased to 20 years from 10 years for losses incurred in taxation years ending after 2005.
bullet Pension income credit - effective for 2006, increased to $2,000 from $1,000.
bullet Personal tax rates - lowest rate will be 15.25% for 2006.  November 2005 budget had proposed 15% for 2006.
bullet Public transit tax credit
bullet Refundable medical expense supplement - maximum will be increased from $750 in 2005 to $1,000 in 2006, with income threshold increasing to $22,140 for 2006.  Both amounts will be indexed thereafter.
bullet Scholarship, bursary and fellowship income will be fully exempt from tax when the income is received in connection with a program for which the student will get an education tax credit.
bullet Small business income tax rate reduction and threshold increase.
bullet Textbook tax credit - effective for 2006 - non-refundable tax credit in addition to the education tax credit, based on $65/month for full-time attendance or $20/month for part-time attendance. 
bullet Tradespeople's tool expenses - for eligible new tool costs in excess of $1,000 (on or after May 2, 2006), a deduction of up to $500 will be allowed for employed tradespeople.

Revised: October 26, 2023



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