Canadian Tax News 2006

The following is new for the tax filing year of 2006.

Budget Amendments
These amendments were drafted for Finance Minister Ralph Goodales 2005 budget.

• The basic personal exemption on income will be increased from $8,012 in 2004 to $10,000 by 2009, allowing Canadians to earn more money tax-free.
• The annual contribution limit on RRSPs will be increased to $22,000 by 2010.
• The 30% foreign content rule on investments is immediately rescinded.

Tax Evasion
Every year, there are convictions for tax evasion. In one case in 2004, a certified general accountant from Calgary was fined $100,000 and given a 6 month conditional sentence. In other cases, fines in the hundreds of thousands and even millions have been levied against delinquent taxpayers. Be sure that you are filing with a legitimate tax preparer.

With that in mind, John McCallum announced The Taxpayer Alert System in November of 2005. The service is a readily available database of accurate tax information to serve as a useful corrective to some of the advice you may be getting from less than scrupulous underground tax preparers.

My Account™
The CRA continues its My Account service into 2006. Its usefulness is worth reiterating. This service allows Canadian taxpayers to conveniently monitor and manage their personal income tax, Canada Child Tax Benefit (CCTB), and GST/HST credit accounts on a secure web site 7 days a week, 21 hours a day.

Voluntary Disclosure Program
The Voluntary Disclosure program allows you to own up to back-taxes owed. Under the program, individuals or corporations who have not filed tax returns for previous years, or have not reported all their income, can correct their tax affairs free of penalization and prosecution.

Any delinquent taxpayers who come forth under the Voluntary Disclosure Program will only have to pay taxes owed plus interest due. In 2003, more than 5,000 Canadians took advantage of the voluntary disclosure program and repaid $288 million in back taxes to the CRA.