Tax and clawback thresholds raised for 2004

(December 23, 2003) In its annual adjustment of tax brackets and credits, the federal finance department is raising the thresholds 3.3% to account for inflation.

The federal government is also phasing in the last of its five-year tax reduction plan announced in the 2000 budget. That means the threshold for the 22% tax bracket will rise to $35,000 in 2004, while the 26% bracket starts at $70,000. The top, 29% bracket, will kick in at $113,804.

“Indexation ensures that inflation does not cause Canadians’ taxes to go up or the value of their tax benefits to be eroded,” said Finance Minister Ralph Goodale in a statement. “It ensures that the tax relief delivered to Canadians through the Five-Year Tax Reduction Plan is permanent.”

With full indexation, the basic personal amount rises to $8,012 for 2004, while the spousal amount reaches $6,803. The clawback for OAS will start at $59,790. Other deductions and credits have been similarly raised, including the GST credit, the disability credit and the medical expense tax credit. For a full list of changes, please click here.