Just a friendly public reminder that starting on July 1st:
The GST goes from 7% to 6%. So most of what you buy will be 1% cheaper.
If you are a purchaser of a monthly transit pass, you will receive a tax credit, which is equal to a 15.25% discount on the monthly pass price (next year this will be 15.5%). So your 1-zone monthly pass will cost $69/month, but after tax time you will receive $10.52 in tax credits, reducing the effective price to $58.48/month. This assumes that you are making enough income to exceed the basic exemption ($8839).
The Canada Employment Credit becomes effective. This will be $250 for 2006 and $1000 for 2007, assuming you make at least that much in employment income for that year. This translates into $38.12 and $155 after-taxes for 2006 and 2007, respectively. This also means that in 2007, you can make nearly $10,000 without having to pay a single dollar of federal income tax.
If you have a child under the age of 6, you will be eligible to receive $100/month in pre-tax income.
If you are employed in the trades, you can deduct an additional $500 for tools, or 5% of your income from trades, whichever is less. In 2007, this goes up to $1000, or 5% of your income, whichever is less. This translates into another after-tax savings of $76.25 and $155 for trades people.
An additional $65/month for full-time students or $20/month for part time students in tax credits. The excuse this time is for “textbooks” although it doesn’t appear it makes much difference whether you buy them or not. This translates into $9.91/month and $3.05/month after-tax which is better than nothing.
There are other tax measures in the budget (feel free to read them here) but they are not likely to be of concern to most of the readers of this site. Everybody in the country benefits from the GST cut and most would benefit from the employer credit. I’m still a little miffed that the Conservatives raised the lower marginal rate, but all in all, I’ll be saving a few bucks from this.
There is also a growing disparity in terms of how the provincial government and the federal government calculates its tax credits – the divergence in the two systems will continue to get wider over time and this will make the tax system slightly more complicated. The provincial government should match these measures, especially the monthly transit pass, employment and educational credits.
This entry was posted on Friday, June 30th, 2006 and is filed under Finance.
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