Canadian Corporate Tax Cuts Will Help Ease Pain for Income Trusts

November 16th, 2007

Recently it was announced that Canada would be lowering nearly all taxes! Canada is economically very stable and has a solid future ahead of it with its vast natural resources. The government is enjoying massive surpluses even with the government increasing spending by over 10% a year; more money pours in than they can spend (how often can a politician say that?). Debt repayments are also occurring ($10 billion this year), and we can continue to pay debts and let inflation make debt repayment easier.

GST = 7%, 6%, 5%

GST will decrease to 5%, from 7% just several years ago… It is currently at 6%, but starting January 1, 2008 the rate will be 5%. I know one person that is not going to take possession of their brand new custom built home until January and this 1% cut will save them over $5,000!

Personal Tax Savings!

Personal Income Taxes will also decrease. Canadians will now be able to earn their first $9,600 tax free (it was $8,929) and the lowest tax bracket will decrease from 15.5% to 15%. A further $500 will be added to the tax free amount a Canadian can earn in 2009, when the amount will be $10,100. This is supposed to save each Canadian around $400 if I remember correctly.

Corporate Tax Savings!

Corporate Tax rate currently sits just above 22% and will be reduced to 15% by 2012. This will bring Canada from the most taxed G7 country to the least taxed! Small businesses will have their tax rate lowered to 11% in 2008! This will help give Canadian businesses a solid footing when competing with other nations. This will also help the Income Trusts in Canada which are going to be taxed. I was irate when it was announced that Income Trusts would be abolished. With these new tax reductions, at least the sting won’t hurt as bad, though I know plenty of people that lost A TON of money. This should help Canadian Income Trusts ease their pain, though I haven’t done the math to see if it will completely null that pain. At least the government is making some ‘right’ moves.

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