Well, perhaps not disappointing to all, but disappointing to me! I was really expecting a capital gains tax reduction or a capital gains tax exemption up to a certain limit. Ah well, I guess we can’t win them all.
Not all is gloom as there were some bright spots in the budget. Here are some of the highlights that I noticed:
- Charitable donations of publicly listed securities to private foundations will be free from capital gains tax.
I’ve read about this tax policy earlier this year, but I guess if this budget passes, this will be written into legislation.
- The value of goods that may be imported duty- and tax-free by returning Canadian residents after a 48-hour absence will rise to $400 from $200.
For those of you who travel to the U.S, you can now purchase more from the states without tax on those weekend trips.
- The age limit for converting a registered retirement savings plan (RRSP) will increase to 71 from 69 for those Canadians who wish to continue working longer.
This can be a helpful policy as it will let your RRSP grow tax free for a couple more years before you are forced to withdraw from it.
- The $4,000 limit on contributions to annual registered education savings plans (RESPs) will be eliminated and the lifetime contribution limit will rise to $50,000 from $42,000.
- The maximum Canada Education Savings Grant annual amount will increase to $500 from $400.
This is a great addition to the budget as it eliminates some of the restrictions with RESP’s. Instead of contributing $2,000/year to get the maximum CESG’s ($400), you can now contribute $2,500/year to get the $500 (20% of $2,500) in CESG’s. You can read more about the Registered Educations Savings Plan here.
- A performance-based rebate program will offer up to $2,000 for the purchase of a new fuel-efficient or efficient alternative-fuel vehicle.
- A new green levy on “gas guzzlers,” will replace the excise tax on heavy vehicles. It will be based on fuel efficiency ratings, and will be paid by the manufacturer on vehicles delivered after March 19. The levy starts at $1,000.
This is a new tax and tax credit to reduce green house emissions from cars and gas guzzlers. From my understanding, if you purchase a hybrid vehicle like the Toyota Prius or Honda Civic Hybrid, you’ll receive a $2,000 rebate. On the other side of the coin, if you purchase a gas guzzler car/SUV, you’ll have to pay a $1,000 levy if the mileage is 13L/100km and a $4,000 levy if the mileage is 16L/100km or greater. Trucks are exempt from the levy. I guess I’ll have to think twice before purchasing another SUV.
There were a few more perks in the budget that I didn’t include in this post. You can see all the 2007 Federal Budget Highlights here.