Quebec, B.C. serve up tax breaks

Taxpayers in Quebec and British Columbia were showered with tax breaks this week as both provinces presented their budgets.

Of course, it will be up to Quebec taxpayers to determine if the tax savings get passed as Premier Jean Charest promptly dropped an election writ after tabling the budget.

If passed, the Quebec budget will increase the taxable income tax brackets by 7% in 2008. According to Ernst & Young, this would mean an individual with a taxable income of $100,000 would enjoy a tax savings of $245 on the year.

The budget also extended tax breaks for post-secondary education and retirement income.

Unlike the rest of Canada, Quebec is proposing a refundable tax credit for registered education savings plans. Under the plan, each contribution of $2,000 in an RESP would provide a refundable tax credit of up to $250, which will be reinvested in the plan according to Ernst & Young. These measures would apply to contributions effective immediately.

At the same time, the budget would allow post-secondary students to transfer the tax credit for their tuition fees to their parents or grandparents.

Seniors, no doubt, will focus on the increase in the maximum amount of income eligible for the non-refundable tax credit, which jumps $500 to $1,500 for the 2007 tax year.

On the west coast, the B.C. government delivered a budget that focused largely on making housing affordable — understandable given the sharp increase in housing prices British Columbians have had to shoulder in recent years.

The most significant tax change introduced in Tuesday’s budget was a plan to cut personal income taxes by 10% for everyone with incomes up to $100,000. According to the B.C. government, when these cuts are added to ones announced in earlier years, about 250,000 taxpayers in that province will not pay any provincial tax, while others will have seen their tax burden drop by up to 70%. The majority of taxpayers will have seen reductions of between 30% and 35% in their provincial taxes since 2001.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(02/21/07)