How the mini-budget affects you (A timely template letter for clients)

(November 2007) Be proactive with your clients. Show them that you are up to date on current affairs and how changes impact their financial situation. Send out this letter outlining how the recently announced federal “mini-budget” affects them and how they can save money in the future.

Dear [Client’s name],

On October 30, the federal government presented a “mini-budget,” which outlined a number of initiatives designed to create tax savings for Canadians. Tax cuts were the main thrust of Finance Minister Jim Flaherty’s announcement, which means there are a few new ways you can save your money.

In case you haven’t had time to follow the media coverage on this issue, I’ve summarized the tax changes and how they’ll benefit you and your family.

GST reduction The most noticeable savings will come into effect on January 1, 2008 when the government plans to reduce the GST by 1%, bringing the total tax to 5%. This means that someone spending $10,000 to renovate their home will save $100.

Basic Personal Amount increase Come tax time in April, Canadians will be able to claim a basic personal amount of $9,600 — up from $8,929. This is retroactive to January 1 of this year. On January 1, 2009 the basic personal amount will be raised again — this time to $10,100.

Lowest personal income tax rate reduced One of the government’s pledges is to reduce the lowest personal income tax rate to 15% from 15.5%, retroactive to January 1, 2007.

R elated Stories

Industry applauds tax proposals Flaherty serves up more tax cuts Federal Budget 2007: An advisor’s summary

Corporate tax cut For businesses, the Tories have promised to gradually reduce the corporate income tax rate to 15% by 2012, starting with a 1% drop in 2008. This new rate also applies to income trusts, which Flaherty announced last year would be taxed in 2011, meaning trusts will see their distribution tax rate fall to 16.5% in 2011 and an additional 1.5% the following year.

Small business tax cut Small business owners will receive an early tax break when the small business income tax rate falls to 11% in 2008, one year earlier than scheduled. Currently, the tax rate for small companies sits at 13.1%.

I hope you find these highlights useful. If you’d like to discuss how these initiatives affect your financial plan, please don’t hesitate to contact me.

Sincerely,

[Your signature]

[Your name]

Filed by Bryan Borzykowski Advisor.ca, bryan.borzykowski@advisor.rogers.com

(10/31/07)