Tax Guide - Keeping Your Taxes Low

Every year, many Canadians miss out on important savings come tax time. There are plenty of opportunities to save; but unfortunately, many of us don’t know what we’re entitled to. This year, get the most of your income tax return with help from our Conservative Government’s Tax Guide.

Since 2006, our Government has helped Canadians by reducing taxes in over 120 different ways. These include:

  • cuts to the GST
  • reductions in income taxes
  • introduction of landmark Tax-Free Saving Account (TSFA) to help Canadians save
  • targeted tax cuts for families, seniors and job creators

In total, we have helped a typical Canadian family save nearly $3,100 on average per year.

For more information, you can contact Canada Revenue Agency at 1-800-959-8281 or visit www.cra-arc.gc.ca

Lowering Taxes for All Canadians

Tax-Free Savings Account (TSFA)

Canadians have many reasons to save for our future; from home renovations to retirement, or even medical expenses. The TSFA can help all Canadians work towards their short-term and long-term financial goals.

Our Conservative Government’s TFSA is a flexible, registered savings account. Investment income, including capital gains, earned within the account is not taxed; and withdrawals are tax-free. Canadians who are 18 and older can contribute up to $5,000 each year. For example: if John only deposited $2,000 into his TSFA in 2011, and assuming he used all his contribution room in 2009 and 2010, he will have room to deposit $8,000 in 2012 (i.e. the leftover $3,000 from 2011 + the full $5,000 for 2012).

It’s important to remember that withdrawn money can only be re-contributed in future years. It cannot be re-contributed in the same year without penalty (ex. If Jane has used all her contribution room and withdraws $1,000 in April 2011, she cannot re-contribute that money until January 2012).

*Contact your local financial institution or visit www.tfsa.gc.ca to learn more about the rules around this important savings vehicle.

Goods and Services Tax (GST) Credit

Conservatives are committed to keeping taxes low and giving Canadians a break every way we can. The GST credit is a tax-free quarterly payment that helps individuals and families with modest incomes offset all or part of the GST they pay. Don’t forget: to receive the GST credit you have to apply for it every year come tax time.

Deduct Medical Expenses

Conservatives are helping you meet your health care needs through a deduction for medical expenses. The Medical Expense Tax Credit applies to a whole host of eligible expenses – from home care services, to laser eye surgery, to orthopedics – that are in excess of the lesser of $2,052 or 3% of net income. There is no limit on the amount of expenses a taxpayer can claim for himself or herself, a spouse or common-law partner, or child under 18. This year, as part of Budget 2011, our Government went one step further to remove the claim limit for those who care for an aging parent, sibling or other relative. You can claim medical expenses paid in any 12-month period ending in 2011 and not claimed in 2010.

Public Transit Tax Credit

Canadians who choose public transit are making a choice that’s good for the wallet and for the environment. Transit users can claim a non-refundable tax credit of 15% of the cost of their monthly or yearly public transit passes. This means that if you buy transit passes that cost $85 per month, you could save over $150 per year. That’s like getting almost 2 months free

Our Government’s Public Transit Tax Credit is making it more affordable to get where you need to go, while helping our environment at the same time.

For more details, visit www.transitpass.ca

Lowering Taxes for Home Buyers

First-Time Home Buyers’ Tax Credit

The fees associated with purchasing a first home can really add up. To help Canadians with these costs, our Conservative Government introduced the First-Time Home Buyers’ Tax Credit. The credit allows Canadians to save up to $750 on qualifying homes purchased after January 27, 2009.

The First-Time Home Buyers’ Tax Credit is also available to existing homeowners who are eligible for the Disability Tax Credit (DTC) who purchase a more accessible or functional home, or for the benefit of a DTC – eligible person who is related to the individual purchasing the home.

Home Buyers’ Plan

For many first-time homebuyers or builders, saving for a down payment can be the most challenging part. To help Canadians saving for their first big purchase, our Conservative Government raised the amount Canadians can withdraw from their Registered Retirement Savings Plan (RRSP) for a down payment on their first home.

Through Canada’s Economic Action Plan, our Conservative Government increased the maximum Canadians can withdraw from their RRSPs for a home purchase to $25,000. Through these important actions, our Conservative Government is helping Canadians realize their dream of buying a new home.

Lowering Taxes for Seniors

Doubling the Pension Income Amount

Canadian Seniors have worked hard and paid their dues. That’s why our Conservative Government is delivering real tax savings to help seniors keep more money in their pockets, where it belongs.

Not only have seniors paid taxes, they’ve also saved for retirement. Years ago, the Government of Canada introduced a non-refundable pension income credit to apply to the first $1,000 of eligible pension income. A lot has changed since then, which is why in 2006 we increased the maximum amount of eligible pension income that can be claimed to $2,000. This results in even more savings that will make a real difference for pensioners.

Increasing the Age Amount

Canadian seniors have worked hard to prepare for their retirement. That’s why our Conservative Government increased the Age Amount, helping low and middle-income seniors keep more money to meet their needs.

Our Government increased this allowable amount by $2,000, providing even more support to Canadian seniors. The Age Amount allows seniors with a new income less than $32,961 in 2011, aged 65 and over, to claim up to $6,537, saving them as much as $981 on their taxes this year. The middle-income claim cut-off is $76,541.

Pension Income Splitting

To help the tax burden and deliver fairness for Canadian Pensioners, our Conservative Government introduced Pension Income Splitting.

Generally, each individual Canadian pays taxes on their full income earned. Pension Income Splitting allows any Canadian resident who receives qualifying pension income to allocate to their spouse (or common-law partner), with whom they reside, up to one-half of that income. By doing so, a pensioner and their family can dramatically reduce their tax load.

Increasing The Age Limit for Converting RRSPs to RRIFs

Registered Retirement Savings Plans (RRSPs) provide one of the best opportunities for Canadians to save for the future. Since RRSP contributions are not taxable, they are the ideal way to plan for retirement. However previously, some Canadians were restricted by the way RRSPs are structured. Even though they chose to work past 69 years of age, it was a requirement to convert their RRSP into a registered Retirement Income Fund (RRIF) and begin making withdrawals.

Our Conservative Government is taking action for Canadians nearing retirement. We increased the age limit for converting RRSPs to RRIFs from 69 to 71. Now, more Canadians have the freedom to choose when they convert their RRSPs. We are delivering tax savings and choice for Canadian seniors.

Lowering Taxes for Small Business Owners, Farmers and Fishermen

When a family farm, small business or fishing enterprise passes from on generation to the next, the property or shares are subject to Capital Gains Tax. In years previous, the first $500,000 of the value was tax-free.

Our Conservative Government increased this exemption to$750,000. By increasing the Lifetime Capital Gains Exemption, our Conservative Government is taking real action to help keep family businesses where they belong: in the family.