November 2005 Archives

Liberal Government’s Pre-Election Spending Bender

Liberal Government’s Pre-Election Spending Bender – Largest in Canada’s Electoral History

Ottawa: From November 3rd to November 25th, the Canadian Taxpayers Federation (CTF) tracked 145 pre-election spending announcements totaling $24.5-billion made by Paul Martin’s Liberal government. Last week alone – November 21st to November 25th – the federal government’s spending binge topped $20-billion, unveiled in ribbon-cutting ceremonies and news wire stories across Canada.

“Announcing $24.5-billion in spending over 23 days works out to more than $1-billion per day or $44-million every hour,” observed CTF federal director John Williamson. “With the federal government budgeted to spend $163.7-billion on all programs in fiscal 2005/06, $24.5-billion represents 15 per cent of the entire fiscal year’s planned expenditures.”

The CTF estimates that half of these announcements represent new spending not included in either the 2005 Budget or the 2005 Economic Update released on November 14th. Further, most of the spending is being announced in swing ridings where the Liberals are vulnerable and where the electoral battles are tight between government members and the opposition parties.

Some of the spending gems include:

$332,528 for assisting Quebec’s blueberry industry.
$139,000 for fish harvesters skills promotion in Halifax, Nova Scotia.
$276,000 for the Bata Shoe Museum in Toronto, Ontario.
$361,666 to put synthetic turf on a soccer field in Longueuil, Quebec.

For a complete breakdown of the CTF’s “Spend-O-Meter” go to:

http://www.taxpayer.com/pdf/Liberal_Pre-election_Spending_promises.pdf

“Politicians used to throw salt pork at voters to win their support in an election,” concluded Williamson. “Today’s scheme is simply using tax dollars and the government’s spending powers for blatant electioneering. The federal government has embarked on the largest pre-election spending spree in Canadian history.”

John Williamson
Canadian Taxpayers Federation

Finance Minister Tables Notices and Amendments

On November 17, 2005, the federal Minister of Finance tabled several amendments concerning both income tax measures and GST/HST changes. Several of the amendments are retroactive.

From the Finance Canada web site:

Minister of Finance Tables Notice of Ways and Means Motion for Remaining Budget 2005 Income Tax Measures 2005-081 (November 17, 2005) - Includes a Backgrounder and Notice of Ways and Means Motion to Implement Certain Provisions of the Budget Tabled in Parliament on February 23, 2005 - 2005-11-17.

Minister of Finance Proposes Amendments Concerning the Income Tax Treatment of Certain Expenditures
2005-080 (November 17, 2005) - Includes Backgrounder and Notice of Ways and Means Motion to Amend the Income Tax Act - 2005-11-17.

Proposed GST/HST Amendments Relating to the Financial Services Sector
2005-079 (November 17, 2005) - Includes Legislative Proposals, Draft Regulations and Explanatory Notes Relating to the Excise Tax Act - 2005-11-17.

StatsCan Publication: The Canadian Economic Observer

The Canadian Economic Observer (CEO) can be ordered via the Statistics Canada web site.

"The Canadian Economic Observer (CEO) is a quick, concise and authoritative analysis of the Canadian economy. Available in print or internet versions, this monthly journal gives you the inside track on current economic trends and shows you the dynamics of change in today's economy from the inside out."

CEO topics include:
- current economic conditions, unemployment, jobs and consumer spending
- industry and trade developments
- financial markets and profits
- developments in provincial and international economies
- and much more

For more information see the Statistics Canada web site at:
http://www.statcan.ca/english/ads/11-010-XPB/index.htm

Investors reminded to exercise caution concerning donations

CRA Taxpayer Alert: Potential investors reminded to exercise caution with respect to certain donation arrangements

The Canada Revenue Agency has released a taxpayer alert reminding investors "that the proposed legislative changes announced by the Department of Finance on December 5, 2003, to limit the tax benefits of charitable donations made under tax shelter and other arrangements, are in effect."

Given that investors may see an increasing number of advertisements for tax shelter donation arrangements as the calendar year end approaches, potential investors should take caution.

"Investors should be aware of the risks associated with participating in certain tax shelter donation arrangements, including gifting trust arrangements, leveraged cash donations, and buy-low, donate-high arrangements. The CRA previously alerted investors about these risks in November 2003 and again in November 2004, advising investors to take a number of precautions to protect their interests."

For the full Taxpayer Alert, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/alerts/2005/a051122-e.html

Revenue Minister McCallum launches Taxpayer Alert

The Minister of National Revenue has launched the Taxpayer Alert initiative as part of the CRA's efforts to inform Canadian taxpayers.

According to the CRA news release:

"The Taxpayer Alert initiative further supports this principle by providing Canadian taxpayers with a central repository of information about such things as tax shelters, tax havens, the underground economy and enforcement activities, as well as warnings about tax avoidance and tax evasion schemes. It also alerts taxpayers to the risks they are exposed to by hiring contractors who work in the underground economy."

The news release is available at:
http://www.cra-arc.gc.ca/newsroom/releases/2005/nov/nr051114-e.html

Additionally, the news release provided the following Tax Alert and Fact Sheets:

Taxpayer Alert:

Owners of self-directed RRSPs should use caution with tax-free withdrawal schemes
http://www.cra-arc.gc.ca/newsroom/alerts/2005/a051110-e.html

Fact Sheets:

Be an informed donor
http://www.cra-arc.gc.ca/newsroom/factsheets/2005/nov/fs051110-3-e.html

You have rights!
http://www.cra-arc.gc.ca/newsroom/factsheets/2005/nov/fs051110-e.html

Fairness provisions in the Income Tax Act and the Excise Tax Act
http://www.cra-arc.gc.ca/newsroom/factsheets/2005/nov/fs051110-2-e.html

Taking the Spin Out of the Economic and Fiscal Update:

The Canadian Centre for Policy Alternatives (CCPA) has released "Taking the Spin Out of the Economic and Fiscal Update: A Guide to the Numbers" by Ellen Russell.

From the CCPA news release:

Monday’s Economic and Fiscal Update is animated more by politics than economics. In the present political circumstances the temptation for the Liberals to massage their financial disclosures in a manner consistent with their pre-election strategy is great.

A new report, released today by the Canadian Centre for Policy Alternatives, provides Canadians with tools to decode the spin. Authored by CCPA Senior Economist Ellen Russell, the report helps journalists and others examine the plausibility of the government’s numbers by providing:
- an assessment of how big the current year’s surplus should be;
- an indication of budget surpluses for future years;
- pointers on how to tell whether the government is spending as much as it seems to be;
- a reality check for the plausibility of revenue and expenditure estimates.

The full report is available from the CCPA web site at http://www.policyalternatives.ca

Scientific Research and Experimental Development Tax Credit

The BC Ministry of Small Business and Revenue, Income Taxation Branch, has posted the Revision to Bulletin CIT 007 on its web site. This bulletin addresses the British Columbia Scientific Research and Experimental Development Tax Credit which has been revised to reflect the extended expiration date of the tax credit program.

For more details, see the web site at:
http://www.rev.gov.bc.ca/itb/WhatNew/CIT007_revision.htm

CRA Excise and GST/HST News

The latest edition of the Canada Revenue Agency's Excise and GST/HST News is now available on the CRA Web site at:
http://www.cra-arc.gc.ca/E/pub/gr/news58/README.html

This edition includes information on Bill C-33, specifically measures to reduce the air travellers security charge and amendments to the First Nations Goods and Services Tax Act "to facilitate the establishment of taxation arrangements between the Government of Quebec and interested Indian bands situated in Quebec."

It also includes information on Bill C-34 "relating to directors’ liability for GST/HST net refunds, the confirmation of a person’s GST/HST registration status, the excise tax on jewellery, a further rate reduction for the air travellers security charge as well as the extension of the 83% health care rebate to eligible charities and non-profit health care organizations that provide health care services similar to those traditionally performed in hospitals."

Also in this issue:
- 10% tax on insurance premiums (other than marine)
- Procurement cards and claiming input tax credits
- Third party authorization for excise and GST/HST rulings
- GST/HST content on the CRA Web site
- File your GST/HST return electronically
- Prescribed rates of interest
- What’s new in publications

CPP pensionable earnings ceiling for 2006

The Canada Revenue Agency (CRA) announced today that for 2006 the maximum pensionable earnings under the Canada Pension Plan (CPP) will be $42,100, up from $41,100 in 2005.

According to the CRA news release

"The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

Contributors who earn more than $42,100 in 2006 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2006 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP."

For the full text of the news release and more information, please visit the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/releases/2005/nov/nr051102-e.html