Tax Savings - 2007 Federal Mini-Budget

In something of a surprise move, Finance Minister Jim Flaherty has delivered substantial tax savings to Canadians in his fall Economic Statement. Some highlights include:

- a reduction of GST from 6% to 5%, effective January 1st, 2008

- a reduction of the lowest personal tax rate from 15.5% to 15%, retroactive to January 1st, 2007. This rate applies to taxable income up to $37,178 for 2007. The mini-budget also also increases the base of the personal tax credit from $8,929 to $9,600 for 2007 and 2008, and to $10,100 in 2009, with matching changes to the spousal and wholly dependent relative credits. The savings for a single individual at an income level of $37,000 will be in excess of $200.

- an incremental reduction in the general corporate tax rate from 22.12% in 2007 to 15% in 2012. Decreases will begin on January 1st, 2008, when the rate will be reduced to 19.5%. This is substantially ahead of Minister Flaherty's previously announced schedule.

The full statement can be viewed at http://www.fin.gc.ca/budtoce/2007/ec07_e.html.