Canadians – Individual budget changes
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The lowest federal personal income tax rates will be reduced, effective January 1, 2005, from 16% to 15%. The two middle personal tax rates will be reduced by one percentage point, effective January 1, 2010, to 21% and 25%.
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The taxable income threshold at which the top tax rate applies will be increased to $200,000, effective January 1, 2010.
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Budget 2005 proposed that the basic personal amount would be increased gradually to $10,000 by 2009. The proposed tax plan accelerates these scheduled increases, with an immediate increase in the basic personal amount of $500, effective January 1, 2005. The proposed increases in the spousal amount will also be accelerated, with an immediate increase of $425, effective January 1, 2005.
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The proposed tax plan proposes a Working Income Tax Benefit (WITB) starting in 2008 to supplement the earnings of low-income workers. Benefits under a WITB will be determined as a percentage of an individual’s earnings and will be delivered as a refundable tax credit.
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Effective in 2006, two measures impacting persons with disabilities have been further increased: the Child Disability Benefit to $2,300 and the maximum refundable medical expense supplement to $1,000.
