April 2007 Archives

Only three days left to file your 2006 tax return!

A reminder from the Canada Revenue Agency that Canadians have until midnight Monday, April 30, 2007, to file their 2006 income tax returns and pay any amounts owing without penalty.

"The filing deadline for self-employed individuals and their spouses is June 15, 2007. Individuals who owe tax for 2006 will have to pay their balance owing by April 30, 2007, whether their return is due then or on June 15."

"The CRA has extended the hours for general and business telephone enquiries to 10 p.m. on weekdays, and from 9 a.m. to 1 p.m. on weekends. These extended hours are in effect until April 30. For more information, visit www.cra.gc.ca/contact."

Root Canal Narrowly Outpolls Tax Audit as More Unpleasant Experience

CTF public opinion poll also finds only 13% of Canadians expect to benefit from tax relief in the Conservative budget.

Ottawa – The Canadian Taxpayers Federation (CTF) released results of a public opinion poll in advance of Monday’s deadline for Canadians to file their 2006 income tax returns. The poll was conducted by Innovative Research Group for the CTF on (1) the tax relief in the federal budget, and (2) whether Canadians would prefer a root canal or a tax audit.

Canadian unconvinced they will personally benefit from tax relief in the new budget –

When Canadians were asked about the recent federal budget and how much the tax relief will help them a paltry 2% said “a lot” and only 11% said “somewhat.” A 67% majority of Canadians stated they will not personally benefit from the federal government’s tax relief. Of this sum 32% responded “not very much” and 35% “not at all.” The remainder either “don’t know” (2%) or “have not heard enough to say” (17%).

"It suggests the Conservatives missed an opportunity to brand themselves as the party of lower taxes. The governing Conservatives must do more on tax cuts if they want to make a positive impression on Canadian taxpayers,” said CTF federal director John Williamson. “The 2007 Budget did not provide broad-based personal income tax cuts and instead targets the tax relief. But very few taxpayers lucky enough to qualify for a tax break call it dramatic, deep or significant.”

Canadians divided on whether a “root canal” or a “tax audit” is more unpleasant –

When asked which is more unpleasant, 47% of those surveyed responded “root canal” and 38% said a “tax audit.” The remaining 15% “didn’t know.” Only Atlantic Canadians are wearier of the taxman (45% versus 43%), and Ontario respondents are split – with 45% saying a “tax audit” is more unpleasant and 45% believing a “root canal” is more disagreeable.

The online survey was conducted from April 4 to April 11, 2007, among 1,445 Canadian adults 18 years-of-age and older. The sample used has been weighted according to 2001 Census data to accurately reflect region, gender and age. The results are considered accurate to within +/-2.58 percentage points, 19 times out of 20.

The results are available online: http://www.taxpayer.com/pdf/CTF_Poll.pdf

John Williamson
Federal Director
Canadian Taxpayers Federation

CRA Tax Tip: Are you a newcomer to Canada?

The Canada Revenue Agency provides the following Tax Tip for newcomers to Canada.

Did you know...

That if you are a newcomer to Canada, you may be eligible for credits and benefits such as the Canada Child Tax Benefit, the Universal Child Care Benefit, and the Goods and Services Tax/Harmonized Sales Tax Credit (GST/HST)?

For more information, visit www.cra.gc.ca/tax/individuals/menu-e.html and select “N” for “Newcomer to Canada” from the drop-down box menu.

CRA News Release: Electronic filing of income tax returns increases in 2007

The following is an exerpt from a news release from the Canada Revenue Agency.

Ottawa, April 19, 2007... The Canada Revenue Agency (CRA) announced today that, as of April 1, 8.3 million people have filed their 2006 income tax returns. Of these returns, 62.4% were filed electronically, as opposed to 61.2% at the same time last year.

The CRA is responding to the interest and enthusiasm that Canadians show for electronic services by investing time and resources to improve its state-of-the-art suite of electronic services and to provide a wide range of electronic filing options.

Of the approximately 25.8 million Canadians who file an income tax return, more and more are discovering that electronic filing is the fastest and easiest way to prepare and file their returns. There are fewer errors and individuals get their tax refunds in eight business days, or less, with direct deposit. In addition to filing a return over the Internet using NETFILE, Canadians can file over the telephone using TELEFILE, or they can file using EFILE through the services of a professional tax preparer.

The full text of the news release can be found at:
http://www.cra-arc.gc.ca/newsroom/releases/2007/april/nr070419-e.html

Medicare's Socialist Weeds vs. Capitalist Wheat

A Vancouver private health clinic that was prohibited in December from treating British Columbia residents by the provincial government has re-opened its doors to the public. The False Creek Urgent Care Centre will charge $199 for a basic medical evaluation and offer patients a menu of other services. It will operate outside the government-run medicare system and provide emergency care for people willing to pay for immediate service. Predictably, fee-for-service medicine prompted the usual howls of protest.

The False Creek owner, Dr. Mark Godley, skirted provincial law banning doctors or clinics from billing patients for services covered by medicare by adopting a business model from the unlikeliest of places – Quebec. Elsewhere is Canada, “save medicare” activists insist patients sit in queues waiting – and at times dying – for hospital treatment. Yet Quebec offers its residents more private health care than any other province and for-profit facilities operate unmolested by health bureaucrats. Dr. Godley decided to import Quebec’s common sense to Lotus land.

Copying the Quebec model and recruiting physicians from outside the province not enrolled in B.C.’s Medical Services Plan appears to have worked. (The clinic hired two doctors from Alberta and one from Manitoba.) Provincial Health Minister George Abbott believes the private clinic is operating within the law. Moreover, he says Ottawa is unlikely to act because similar clinics exist in Quebec. Federal Health Minister Tony Clement stated the obvious, “This model already is in existence in Canada” and does not violate the Canada Health Act.

Some opponents of timely medical access are worried doctors will opt out of the public system. Indeed, the loss of three doctors from Alberta and Manitoba is a gain for B.C. patients. Yet Canada’s problem is not training doctors but retaining them after graduation.

A study published this week in the Canadian Medical Association Journal reports one in nine trained-in-Canada doctors is opting to practice medicine in the United States. (It is “only” one in 12 if U.S. students are excluded.) With 17 medical schools in Canada, the impact of this brain drain is like setting aside the graduates from two average-sized schools for employment in the U.S. The economics of Canada’s strict command-and-control medical system is responsible for the exodus of talent and doctor shortage.

Permitting more private care, choice and competition in Canada will result in more doctors working in Canada, not fewer. As in all other areas of the Canadian economy, some will opt to work in the public system and others in the private sector. Yet for defenders of the status quo, socialist weeds still taste better than capitalist wheat (to paraphrase China’s deceased Communist leader Mao Zedong).

Liberal MP Hedy Fry, cannot grasp why any Canadian would spend their income to buy a health service. Responding to the re-opening of the Vancouver clinic, she wondered how it will survive when Canadians are “100% entitled to have medically required services paid for” and why “someone [would] pay for something that is covered by public insurance?” Dr. Fry has spent too much time in Ottawa and not enough with patients.

The answer is obvious to anyone willing to look. Government managed health care has resulted in long wait lines for basic medical services. Furthermore, many Canadians are simply unable to find a doctor. According to a 2004 report from Statistics Canada some 1.2 million Canadians cannot find a family doctor. So much for a 100% entitlement.

Fewer and fewer Canadians believe mandatory wait lines are superior to private alternatives. As such, they are increasingly open to private delivery within a publicly funded medicare system, and even a parallel system operating alongside medicare.

Increasingly, Canadians want competition within medicare to ensure their tax dollars are delivering health care results, ensuring good customer service and improved outcomes. Many also believe government has no business telling people they cannot spend their after-tax dollars on additional medical procedures. As a result, they are looking to Europe – not America – for solutions.

Compared to other developed nations, Canada tops the list in spending, has the most restrictions on private medicine, and ranks in the middle in terms of outcomes. Sweden, for example, spends less money, has more private involvement, and offers more services to its citizens. Name your developed country – Germany, France, New Zealand, Japan, etc. – and chances are very strong they provide better care to their citizens at a lower cost. What these nations have in common is mixing a public system and a private system to deliver superior results. This is what Canadian governments ought to be striving for. Happily for patients it is what Dr. Godley is working to achieve.

John Williamson
Federal Director
Canadian Taxpayers Federation

CRA Tax Tip: Claiming child care expenses

The Canada Revenue Agency provides the following Tax Tip on claiming child care expenses:

Did you know...

That you can claim child care expenses on your income tax return if your child is cared for at home or in nursery school, daycare, day camps, boarding schools, and sports schools? You can claim these expenses if you or your spouse or common-law partner incurred the expenses in order to work, carry on a business, or attend school.

If you qualify and your child is under the age of 7, you could claim up to $7,000 a year. If your child is over 7 but under 16 years of age, you may be able to claim up to $4,000. There is no age limit if you have a disabled child, and you could be able to claim up to $10,000.

For more information on claiming child care expenses, visit www.cra.gc.ca/tax/individuals/menu-e.html and select “C” for “child care” from the drop-down box menu.

Helping Small Businesses by Reducing the Compliance Burden

CRA News Release

The Minister of National Revenue announced the Canada Revenue Agency's Action Task Force on Small Business Issues Report: Helping Small Businesses by Reducing the Compliance Burden http://www.cra-arc.gc.ca/newsroom/releases/2007/april/nr070411-e.html

Fact sheet: Canada Revenue Agency's Action Task Force on Small Business Issues
http://www.cra-arc.gc.ca/newsroom/factsheets/2007/april/fs070411-e.html

CRA Tax Tip: Tax perks for students!

For more Tax Tips visit the Canada Revenue Agency web site.

Did you know...

That as a student, you may be able to claim a tax credit for the tuition fees you paid for post-secondary level courses you attended during the year? You may also be able to claim an education amount of $400 as a full-time student and $120 as a part-time student for each whole or part month you were enrolled in a qualifying program. In addition, you may be able to claim the proposed non-refundable textbook credit to help with the cost of your textbooks.

You may also be eligible to claim moving expenses, child care expenses, and a tax credit for interest paid on your student loans, as well as the proposed non-refundable tax credit for public transit passes.

For more information on students, visit www.cra.gc.ca/tax/individuals/menu-e.html and select “S” for “students” from the drop-down box menu.

CRA Tax Tip: The easiest way to pay!

The Canada Revenue Agency's Tax Tip for paying personal or business income taxe through your bank:

Did you know...

That you can save time by paying your personal and/or business income tax through your financial institution's telephone and Internet banking services? You can contact your financial institution to find out if you can schedule post-dated payments. You may also be able to file your Goods and Services Tax/Harmonized Sales Tax (GST/HST) return or remit any balance owing through the Canada Revenue Agency's GST/HST electronic data interchange service.

Canada's New Government – Now 14% Bigger!

Taxpayers looking for truth in budgeting won’t hear it from Jim Flaherty. Since the federal budget was tabled on March 19, Canada's Finance Minister's conservative-sounding rhetoric suggests we have reached a new era of prudent budgeting in Ottawa. Nothing could be further from the truth.

Federal government expenditures are rising dramatically. In the 2006 fiscal year — the first year of Mr. Flaherty’s watch — spending ballooned by $13.8-billion, rising from $175.2-billion to $189.0-billion. This is the second biggest jump since the budget was balanced a decade ago. In other words, several Liberal budgets were more prudent than Mr. Flaherty’s work. The outlook isn’t much better for the coming fiscal with spending set to jump another $10.6-billion, levelling off at $199.6-billion.

The Finance Minister dismisses any criticism that he has become a big spender even when his two-year binge will total $24.4-billion. As National Post columnist Andrew Coyne calculates, Mr. Flaherty is now “the biggest-spending finance minister in the history of Canada. It’s a sad achievement but well-earned since Canada's New Government is now 14% bigger after two Flaherty budgets.

Because the finance minister cannot refute the math he has tried to justify his recklessness. For example, he has downplayed the spending numbers by saying two-thirds of it should not be counted since the cash will be transferred to other levels of government. This is absurd. Conservatives in opposition routinely berated Liberal spending increases without discounting the billions of dollars in transfers the previous government delivered to the provinces and municipalities. What’s the difference?

Mr. Flaherty is also exaggerating the size of his tax relief package. He has said, "Canada's new government has introduced nearly $38-billion in individual tax relief over [three years].” Canadian taxpayers should be so lucky. The 2007 Budget did provide modest relief to low-income Canadians and families with children. It also reaffirmed already announced tax breaks for seniors, including pension splitting.

If the tax relief was as large as the minister claims, it would be reflected in the budget’s revenue tables. Yet the only tax reduction that has actually resulted in a decrease in Ottawa's revenue bite is the one-point GST cut.

According to the 2007 Budget, GST revenues were $33-billion in fiscal 2005. In fiscal 2007, Ottawa will collect $30-billion from this tax — that’s a drop of $3-billion. Turn now to personal income taxes. Two years ago, these revenues totaled $104-billion. This year Ottawa will collect $115-billion and the amount rises to $121-billion next year. If Mr. Flaherty thinks this calculation unfair, we can instead measure the tax bite as a percentage of the economy as the budget does. In fiscal 2005, GST revenue accounted for 2.4% of GDP, dropping to 2.0% in 2007. Personal income taxes meanwhile will rise to 7.7% of GDP this year, up from 7.6% two years ago. More tax revenue going to Ottawa means the Conservative’s tax relief was neither deep nor dramatic.

A new tax measure in the 2007 Budget will also result in Ottawa collecting more revenues from businesses. Closing an interest deductibility loophole will, according to budget estimates, result in $40-million more flowing to government coffers. Yet a finance official claims this amount is just “the tip of the iceberg.” Private-sector forecasts say the tax measure is worth hundreds of millions of dollars a year.

Of course, there is much to be gained from reforming and simplifying the tax code. Yet whenever a government eliminates or reduces a tax deduction or credit, the finance minister should offset the revenue increase dollar for dollar with a corresponding reduction in the general tax rate. Mr. Flaherty hasn’t done this.

The 2007 Budget was a missed opportunity to use the government’s massive surpluses to lower personal income taxes. Instead of seizing it, Mr. Flaherty went on a wild, George W. Bush-style, big government spending spree. Although Ottawa is not running annual deficits, large surpluses are not the hallmark of a responsible government either.

A surplus is the result of ongoing over-taxation by the state. High taxes weaken a nation’s competitiveness by removing resources from the private sector and impeding economic growth. The Conservative’s budget is proof a balanced budget does not force lawmakers to control spending because it can happen by way of high taxes.

John Williamson
Federal Director
Canadian Taxpayers Federation

Shrinking Corporate Welfare, A Step in the Right Direction

Industry Canada's industrial budget cut 40%

OTTAWA - The Canadian Taxpayers Federation (CTF) responded to the federal government's revamped industry subsidy program. Details of the Strategic Aerospace & Defence Initiative (SADI) were revealed by Industry Minister Maxime Bernier and Public Works Minister Michael Fortier today in Montreal. The new corporate welfare fund replaces the discredited Technology Partnerships Canada (TPC) program.

TPC was Ottawa's flagship corporate welfare program and authorized
$3-billion in payments since its inception in 1996. Taxpayers were
originally told every TPC investment dollar would return $1.74 in repayments from businesses. To date, only $169-million has been recouped by the government. This is a repayment record of less than 6 per cent.

SADI is budgeted to spend $900-million over the next five years to fund Canada's aerospace and defence industries. This amount is 40 per cent less than the amount on offer under TPC, which was $300-million a year. The industry minister will also publicly identify companies that default on repayment obligations and publish all repayments received from recipient companies twice annually.

"Today, the federal government tacitly acknowledged that many of the
criticisms repeatedly raised by the Canadian Taxpayers Federation over the past decade are indeed valid," said CTF federal director John Williamson. "Ottawa's corporate welfare budget is reduced by 40 per cent and disclosure requirements on Industry Canada, as well as on recipient companies, will ensure taxpayers are informed how tax dollars are being used."

He continues, "While these changes do not make the practice of using tax dollars to support businesses good public policy, it does narrow the program. Moreover, we believe the rigid disclosure requirements, if fully enacted by the minister, will ensure corporate welfare remains a discredited policy in the eyes of most taxpayers. Simply put, it will be possible to monitor how poorly industry department officials 'invest' tax money. We will continue to chronicle the repayment records."

Why Does the Aerospace Industry Need Government Support? According to the Industry Canada news release, the aerospace sector had sales of $21.8-billion and exports of $18.5-billion in 2005.

"Why does this industry need to be subsidized," Williamson asked. "The
industry's own financial figures make the case that business is trong and taxpayer support is not indispensable. Outside of military contracts, there is absolutely no need for government to be funding profitable ventures."

John Williamson
Federal Director
Canadian Taxpayers Federation