December 2007 Archives

CRA Fact sheet: 2008 Indexation Adjustment for Personal Income Taxes

According to the Canada Revenu Agency, each year certain personal income tax amounts are indexed to inflation using the Consumer Price Index (CPI) data reported by Statistics Canada.

Increases to tax bracket thresholds, personal amounts and other amounts relating to non-refundable credits, as well as the refundable medical expense supplement and Old Age Security repayment threshold, will take effect as of January 1, 2008. Increases to the Canada Child Tax Benefit (including the National Child Benefit supplement and the Child Disability Benefit) and the Goods and Services Tax Credit will take effect as of July 1, 2008, to coincide with the beginning of the "program year" for payment of these benefits.

A chart comparing the indexed amounts for the 2007 and 2008 tax years is available on the CRA web site at the address below. The chart reflects an indexation increase of 1.9% for 2008.

For more information, see:
http://www.cra-arc.gc.ca/newsroom/factsheets/2007/dec/fs071219-e.html

CRA informs Canadians on tax relief measures

The Canada Revenue Agency has provided a news release informing Canadians on tax relief measures.

According to the CRA, the Minister of National Revenue Gordon O'Connor assured Canadians that the CRA "is ready to support taxpayers to ensure that they understand the new tax measures passed by Parliament [Friday December 14, 2007] and are able to take full advantage of them."

"Canadians will start to see the impact of these tax cuts on January 1, 2008 because of the proactive steps being taken by the Canada Revenue Agency to implement rate reductions", said Minister O'Connor. “The CRA is taking action to ensure all businesses have the information they need to implement the rate reductions so that Canadians can start benefiting from the GST/HST tax cut on January 1, 2008."

The CRA has set up a toll-free GST/HST rate reduction line for businesses and consumers at 1-866-959-7797 (1-866-959-7798 in French), which is available from 8:15 a.m. to 8:00 p.m. (local time), Monday to Friday, across Canada.

For more information on this news release, see:
http://www.cra-arc.gc.ca/newsroom/releases/2007/dec/nr071217-e.html

Tax Alert Warning: Investing in schemes that promise you tax-free withdrawals from RRSPs and RRIFs could result in you losing your retirement savings

According to a tax alert issued by the Canada Revenue Agency, the CRA is finding an increasing number of questionable Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) tax-free withdrawal schemes. As such, the CRA is warning Canadians that "investing in such schemes could result in you losing your entire retirement savings to unscrupulous promoters and in a reassessment of your tax returns."

Stats and Facts
- To date, the CRA has reassessed over 3,100 taxpayers who participated in these schemes resulting in additional taxable income of approximately $144 million.
- Audits of another 1,800 taxpayers with $84 million in RRSP and RRIF investments are currently underway.
- Audits on other arrangements are about to begin.

Questionable RRSP/RRIF schemes
Taxpayers should avoid schemes that promise the following:

- Withdrawal of funds from an RRSP or RRIF without paying tax. Promoters often promise to return part of the taxpayer's investment by offshore debit or credit cards, offshore bank accounts, or loan-back arrangements;
- Immediate access to assets in “locked-in” RRSPs or RRIFs;
- Income tax deductions of three or more times the amount invested in an RRSP;
- Unrealistic returns on investments.

For more information on this tax alert, please see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/alerts/2007/a071129-e.html