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[Do you look forward to the Federal Budget?]

With the announcement of personal tax cuts in October 2007, further tax reductions were not expected in the 2008 Federal Budget. Though there were not broad based cuts this time, there are few items that may be of interest to certain Canadians.

  • For parents contributing to Registered Education Savings Plans (RESPs), the government is proposing to extend the time limit for these plans an additional 10 years.
  • Seniors wanting to work part time but don't because the income reduces their Guaranteed Income Supplement (GIS), will want to stay informed. The government is asking to allow the first $3,500 of earned income to be exempt before calculating GIS; this is an increase from the current $500 maximum.
  • Small business individuals that use their vehicle for business may soon have a simplified method to recording keeping for vehicle expenses.
  • The budget is looking to expand the list of eligible medical expense including the expenses of service animals for individuals with severe autism and epilepsy.
  • For Canadian taxpayers living in designated Northern regions, the government is proposing an increase to the Northern Residence Deduction.

And finally, the introduction of a Tax-Free Savings Account, which allows a Canadian 18 years or older to contribute $5,000 annually, the contributions are not tax deductible. The good news is the earnings in the account are tax free - and withdrawals are not taxed either.

Right now, all of the items are just proposals and the budget will need to be passed by the legislature. Insight will provide further details and how to take advantage of them as soon as the proposals become law.