Minister of Finance Jim Flaherty yesterday announced a Tax Fairness Plan for Canadians that will ensure corporations pay their fair share of taxes instead of shifting the tax burden onto the shoulders of hardworking individuals and families.
The Plan delivers $1 billion in new tax relief for Canadians every year by increasing the age credit for seniors and allowing income splitting for pensioners.
The Tax Fairness Plan also restores balance and fairness to Canada’s tax system by levelling the playing field between income trusts and corporations. This change ensures that Canada’s New Government has the money it needs to invest in the priorities of Canadians.
Canada’s New Government recognizes that seniors and pensioners have made important investments over the years and may be receiving benefits from the current income trust structure. Increasing the age credit and allowing pensioners to split income will allow them to keep more of their income in their retirement years.
The Tax Fairness Plan includes for important measures:
- A Distribution Tax on distributions from publicly traded income trusts and limited partnerships;
- A reduction in the general corporate income tax rate of one-half percentage point as of January 1, 2011;
- An increase in the Age Credit Amount by $1,000 to $5,066, effective January 1, 2006; and
- The government will permit income splitting for pensioners beginning in 2007.
Clearly, Canada was out of step in its treatment of income trusts. Previous Liberal governments failed to act decisively on income trusts and the result was chaos and confusion.
By introducing the Tax Fairness Plan, Canada’s New Government is acting in the national interest, doing what’s right for all Canadians and significantly enhancing the incentives to save and invest for family retirement security.