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FEDERAL BUDGET HIGHLIGHTS - March 2007

Business:

CCA for computers increased from 45 per cent to 55 per cent
Non-residential CCA rates for buildings increased from four per cent to six per cent (must be 90 per cent non-residential)
Buildings will have to be placed into a different class or the current treatment will continue
Accelerated CCA rates available for clean and renewable energy equipment
New 25 per cent tax credit to businesses that create new childcare spaces up to a maximum of $10,000
Federal paper burden will be reduced by 20 per cent by November 2008
Quarterly corporate income tax installments for qualifying Canadian-controlled private corporations (CCPC’s) (taxable income of preceding year cannot exceed $400,000)
Increased corporate income tax threshold where companies can remit quarterly to $3,000
Threshold of $3,000 average monthly withholdings below which a business can remit quarterly rather than monthly
Threshold of $3,000 net GST below which business can remit annual returns
Threshold of $1.5 million taxable supplies (sales) below which business can remit annually

Manufacturing and Processing - Capital cost allowance (CCA) for buildings used in M and P - CCA will increase to 10 per cent from 4 per cent - required usage is 90 per cent must be M and P
Manufacturing and Processing - CCA on machinery and equipment purchased after March 19, 2007 and before 2009 will qualify for CCA rates that will allow for a complete w/off over two years (50 per cent straight line)

Individuals and Families

$2,000 non-refundable tax credit for children under 18 years of age ($310 per child max) claimable by either parent
Spousal tax credit (also available for wholly dependent relative) increased to basic personal amount, will be up to $10,000 by 2009
$1,000 increase to age credit
Pension income splitting allowed between spouses
Increased availability of public transit tax credit; weekly passes and electronic cards now qualify
Lifetime capital gains exemption for farmers, fishers and incorporated small business increased to $750,000 for dispositions after March 19, 2007 – Capital Gains Exemption will be essentially pro-rated for the 2007 year
Working Income Tax Benefit (WITB) – refundable tax credit for each dollar of earned income in excess of $3,000 up to a maximum of $500 for individuals and $1,000 for families
WITB for persons with disabilities – persons eligible for the Disability Tax Credit (DTC) and have earned at least $1,750, income will be supplemented up to $250 and reduced by net family income in excess of $12,833 for individuals and $21,167 for families
Registered disability savings plan – based on RESP design – i.e. – investment income will accrue tax free – lifetime maximum of $200,000 – will qualify for matching grants (Canadian disability savings bonds paid up to $1,000 paid annually when family income does not exceed $20,833, lifetime limit of $20,000) — capital will not be taxed on withdrawal, only the income portion
Elimination of capital gains tax on donations of publicly-listed securities to private foundations
Annual limit of $4,000 for RESP contributions is eliminated, lifetime contribution increased to $50,000
Canada education savings grants up from $400 to $500
Full exemption of all scholarship income (i.e. elementary and high school)
Northern residents deduction expanded to include Municipality of MacKenzie in BC
Meal expenses for long haul truckers (specific definition of long haul drivers) from 50 per cent to 80 per cent deductible – over 5 years – to 60 per cent after March 19, 2007, 65 per cent, 70 per cent and 75 per cent during 2008, 2009 and 2010, respectively; anything after 2010 will be 80 per cent
Beginning 2008 phased in retirement – employees can received up to 60 per cent of accrued pension benefit as well as continue to accrue additional pensionable service – workers must be at least 55 and otherwise entitled to receive the pension without incurring an early retirement reduction
Age limit for maturing registered pension plans (RPP’s) and registered retirement savings plans (RRSP’s) raised from 69 to 71 years
Qualified investments for registered savings vehicles expanded
Extend 15 per cent mineral exploration tax credit another year to March 31, 2008
The amount of goods that can be imported duty free increased from $200 to $400 after 48 hours absence
$3,000 net personal tax threshold under which individuals do not have to remit installments (2008 and subsequent years)
Canada-US tax treaty – elimination of withholding tax on interest – other measures as well
$2,000 per vehicle to buyer of fuel efficient vehicles – “green levy” for gas guzzlers, scrappage programs for older vehicles