Families with children biggest winners in budget
Published Monday, March 19, 2007 6:17PM EDT
Last Updated Friday, May 18, 2012 5:54PM EDT
OTTAWA - Canadians with kids will pocket an extra $310 for each child when they do their taxes next year, as families took the starring role in the federal budget's income-tax cut story.
Middle-class singles and couples with no dependents, meanwhile, weren't even given a cameo.
As with much of the Conservative government's budget, tax breaks were targeted rather than across the board. One of the favoured demographic profiles was the family with two children where one parent is at home and earning little or nothing.
The widely debated notion of income-splitting, where both spouses can split the income of the working spouse and claim the lower amount at tax time, wasn't in the cards for this budget.
But the Conservatives sought other ways to ease the burden on families with a stay-at-home parent. In last year's budget, they introduced a $100-a-month Universal Child Care Benefit for children under six, billed as a way of giving parents a choice about how they spent money on child care -- whether at the daycare centre, grandpa's house or mom at home.
This budget increases the basic personal tax credit for low-income spouses so that it is equal to what is afforded to the person working outside the home. This also applies to single people taking care of a dependent relative. That measure translates into a $209 tax break each year, regardless of the income level.
Combine that with a $310 credit per child under 18, and a family with one income earner and two children could see $829 more dollars in 2008.
Reymond Page, a stay-at-home dad in Winnipeg, says he would have preferred to see the money spent on health care, education and infrastructure improvements, something he sees directly impacting his family.
"Is this a short-term thing that's supposed to fire up voters because the Conservatives are throwing money at us? Could that money be used to better effect?'' said Page.
Families will see further benefits if they're putting money into a Registered Education Savings Plan or RESP. The government currently contributes up to $400 a year for every $2,000 that a parent puts into the plan. That grant is being increased to $500 annually, and the maximum total contribution to the RESP is going up to $50,000 from $42,000.
"Looking forward, just the thought of what it's going to cost to send our two children off to school is daunting, so having that little extra room is definitely a bonus,'' said Don Silveri, a North Bay, Ont., father of two school-age children with a working spouse.
But across town, Susan Kindratiuk doesn't see anything in the budget that will affect her taxes. She and her husband are both still in the workforce, with two grown children.
"It would have been nice to have something in there for me, that would have made me happy,'' said Kindratiuk.
"I was really hoping there would have been something in there for capital gains deductions.''
John Williamson of the Canadian Taxpayers Federation says the budget was a missed opportunity to give all Canadians some of their money back.
"Not providing broad-based tax relief is a problem because it means that not all Canadians are enjoying the fiscal dividend that's coming from a rising surplus and savings on debt interest,'' said Williamson.
Poor Canadian families will reap the greatest tax benefits from Finance Minister Jim Flaherty's second budget.
His highly touted Working Income Tax Benefit shields those on social assistance from having their some of their earnings from low-wage jobs clawed back at tax time -- called the welfare wall. The government estimates the measure will encourage 60,000 Canadians on welfare, including aboriginals, to enter the workforce.
For example, a family with a net income of less than $14,000 a year would be eligible to receive a $1,000 tax credit. An individual with a net income of less than $9,500 per year would get a credit of $500.
Seniors were also helped in the budget, albeit with some measures that were previously announced.
A new measure, though, is that older Canadians will not be required to convert their RRSPs into registered retirement income fund payments until they are 71, up from age 69. The same will apply to payouts of registered pension plans.
As announced last fall, older couples will be able to split their pension incomes, potentially a major savings for seniors such as Pat McHenry, a retired federal government worker in Corner Brook, NL.
"That's probably going to be beneficial because my wife is going to be retiring soon and she'll have a much lower income than I will have,'' said McHenry.
"I would have liked to have seen something more across-the-board for seniors with my income capacity, which is not high but not poverty level either."