Tuesday, April 03, 2007

Canadian Federal Budget Highlights from last month

Canadian Federal Budget Highlights
Finance Minister Jim Flaherty delivered the 2007 Federal Budget on March 19, 2007. In case you haven’t had the chance to review all the proposed changes, here’s a brief overview of the key tax measures that may be of interest to you.

Please note that these proposed changes are not law at the present time. The following is provided for information purposes and should not be relied upon as tax advice. Please consult your tax professional.

Age Limit For Maturing Retirement Plans
It is proposed that seniors will have until age 71, an additional two years, instead of age 69 to convert their Registered Retirement Savings Plans (RRSP) and Registered Pension Plans (RPP) into retirement income plans such as a Registered Retirement Income Fund (RRIF). Moreover, seniors reaching age 70 and 71 in 2007 or 2008 will not be required to make the usual minimum withdrawals from their RRIFs and will be able to make RRSP contributions if they have contribution room. As well, RPP or Deferred Profit Sharing Plan (DPSP) annuity payments may be deferred until the end of the year in which the recipient turns 71.

Registered Education Savings Plan (RESP)
The annual RESP contribution limit of $4,000 will be eliminated, and the lifetime RESP contribution limit for each beneficiary will be increased to $50,000 from $42,000. The Canada Education Savings Grant (CESG) will be increased to $500 from $400 per year. If a beneficiary has unused grant room from a prior year, the maximum CESG for a year will be $1,000. The lifetime CESG limit of $7,200 will remain unchanged. The CESG increase will not be paid to RESPs until the relevant legislation has become law and the delivery systems are put in place. The requirements for part-time students to qualify to receive Education Assistance Payments (EAPs) from their RESPs will be relaxed.

Registered Disability Savings Plan (RDSP)
The Registered Disability Savings Plan (RDSP) is proposed to debut in 2008 and is intended to provide for the financial security of persons with severe disabilities. RDSP contributions will not be deductible and will not be taxable when withdrawn from the RDSP. Contributions can be made until the end of year when the beneficiary turns 59, subject to a lifetime maximum of $200,000. The government will match contributions to an RDSP with a Canada Disability Savings Grant of up to 100 percent, 200 percent or 300 percent, depending on family income. The government will pay up to $1,000 per year as Canada Disability Savings Bonds to RDSPs of beneficiaries with low or modest family incomes.

Registered Plan Qualified Investments Changes
The list of qualified investments for RRSPs and other registered plans is proposed to expand to include certain investment grade debt obligations and any security listed on a designated stock exchange, except any futures contract or derivative instrument where the holder’s risk of loss may exceed the holder’s cost. For example, many foreign exchange-traded funds will be qualified investments.

Public Transit Pass Tax Credit The 2006 federal budget introduced a non-refundable tax credit for monthly public transit passes. The 2007 budget proposes, effective the beginning of 2006, to extend the tax credit to weekly public transit passes and the upcoming cost-per-trip electronic payment cards, subject to certain conditions.

Real Estate Prices in the GTA
Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

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