Ottawa, November 21, 2007
2007-089
Related Document:
Explanatory Notes Relating to the Budget and Economic Statement
Implementation Act, 2007 and Draft Regulations Relating to Tax
Information Exchange Agreements
The Honourable Jim Flaherty, Minister of Finance, today tabled in the
House of Commons the Budget and Economic Statement Implementation Act to
effect the $60 billion of broad-based tax relief proposed in the
October 30, 2007 Economic Statement. The Act also includes Budget 2007
measures not included in the Budget Implementation Act, 2007, which received
Royal Assent on June 22, 2007.
"Our government is reducing taxes across the board for every
Canadian individual and business that pays tax," said Minister
Flaherty. "As a result of our efforts since taking office, taxes will
fall by some $190 billion over this and the next five years to their lowest
level since the early 1960s. This is an achievement of which we can all be
proud."
Building on the initial goods and services tax (GST) reduction introduced
in Budget 2006, the Government proposes to reduce the GST by an additional
percentage point to 5 per cent, effective January 1, 2008. For
consumers, the total savings from the 2-percentage-point reduction will
amount to approximately $12 billion next year. The GST credit will be
maintained at its current level, translating into more than
$1.1 billion in benefits annually for low- and modest-income Canadians.
Among other measures, the Government is proposing additional tax relief
for individuals and families by:
Increasing the basic personal amount to $9,600 retroactive to
January 1, 2007, with a further increase to $10,100 on
January 1, 2009.
Reducing the lowest personal income tax rate to 15 per cent from 15.5
per cent, retroactive to January 1, 2007.
Introducing a new Working Income Tax Benefit.
Eliminating income tax on elementary and secondary school scholarships.
Enhancing the children's fitness tax credit.
Expanding the scope of the public transit tax credit.
"We are also ushering in a new era of declining business taxation
that will strengthen our economy and further encourage job creation,"
Minister Flaherty said. "By 2012, Canada's corporate income tax rate
will be the lowest among the major industrialized economies."
The Government proposes to:
Reduce the general corporate income tax rate to
15 per cent by 2012, starting with a 1-percentage-point
reduction in the rate in 2008 beyond the already
legislated reductions.
Reduce the small business income tax rate to 11 per cent in 2008,
one year earlier than scheduled.
Increase the lifetime capital gains exemption for small business
owners, farmers and fishers to $750,000.
Increase the deductible percentage of meal expenses for long-haul truck
drivers.
Extend the mineral exploration tax credit.
Ease tax remittance and filing requirements for small business.
The Budget and Economic Statement Implementation Act will also bring into
force Prime Minister Stephen Harper's October 10, 2007 announcement
providing for a guarantee that Nova Scotia and Newfoundland and Labrador
will do at least as well as they would have under the previous Equalization
formula and 2005 Offshore Accord if they permanently opt into the new
Equalization formula.
The legislation also proposes to eliminate withholding tax on arm's
length outbound interest payments to residents of all countries effective
January 1, 2008. Based on the proposal in Budget 2007 and building on the
Protocol to the Canada-U.S. Tax Treaty signed September 21, 2007, this major
step forward in Canada's international tax policy will increase access to
foreign capital markets and reduce costs for Canadians and Canadian
businesses that borrow from foreign lenders.
Budget 2007 measures in the Budget and Economic Statement Implementation
Act include measures released in draft on October 2, 2007 (News Releases
2007-074 and 2007-075), as well as proposals relating to the issuance of T3
information slips released in draft on July 4, 2007 (News Release 2007-058).
Revisions to the explanatory notes for certain of these measures based on
public comments received, as well as draft regulations to implement
particular international tax measures and explanatory notes for measures in
the Act that were announced in the 2007 Economic Statement are available
free of charge on the Department of Finance website. Printed copies are
available for $10 from the Department of Finance Distribution Centre at
613-995-2855.
___________________________________
For further information, media may contact:
Chisholm Pothier
Press Secretary
Office of the Minister of Finance
613-996-7861
David Gamble
Media Relations
Department of Finance
613-996-8080
