A refresher on pre-election tax promises
Will Tories stick to their plan?
From infrastructure spending to middle-income tax cuts, there is much speculation on what will be contained in the upcoming federal budget on Tuesday. Here's a refresher of some of the Tories' pre-election tax promises that may resurface:
Homebuyer's tax credit
First-time homebuyers could get a new tax credit for up to $5,000 of the closing costs toward the purchase of a new home. Since closing costs can typically add from 1.5% to 4% to the purchase price of a home, this break would be of particular benefit to younger Canadians struggling to find financing for their first home.
Individuals who receive pension income are entitled to split up to 50% of that income with a spouse or partner. Last year, senior couples were able to save thousands of dollars of tax and, in some cases, restore clawed-back Old Age Security benefits.
In its pre-election platform, the Tories said they would permit families in which one spouse or partner is not working full-time (in order to care for a disabled family member) to split all his or her income with a spouse for tax purposes.
Registered Disability Savings Plan (RDSP) improvements
The RDSP launched in December, 2008, permits individuals to save up to $200,000 on a tax-deferred basis for someone with a disability.
It also comes with generous government incentives. To help parents provide funding for RDSPs, the Conservatives have said they would permit a tax-free rollover of a deceased parent's RRSP or RRIF into an RDSP, subject to the $200,000 lifetime limit.
Senior age credit
In the run-up to the election, the Tories promised to increase the income phase-out from $5,408 in 2009, by an additional $1,000. On top of already announced increases, this could bring the credit to about $6,750 within four years.
Universal child care benefit (UCCB)
Parents with kids under age six should be receiving $100 per month in the form of the UCCB. This amount, which is taxable and not income-tested, could be fully indexed to inflation. In addition, the Tories had promised to make it tax-free to single-income parents.
Tax breaks for small business
Private incorporated businesses currently pay a low tax rate on the first $400,000 of active (i. e. non-investment) business income. The Tories had proposed increasing this amount, called the small business limit, to $500,000.
Capital gains exemption
While the Conservatives have previously increased the lifetime capital gains exemption available on the sale of qualified farm and fishing property, and qualified small business corporation shares to $750,000 from $500,000, the budget may introduce inflation-indexing of this amount.