Ottawa, November 10, 2005
Archived - Department of Finance Releases Annual Tax Expenditure Report
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The Department of Finance today released its annual report on federal tax expenditures.
The report, entitled Tax Expenditures and Evaluations, provides estimates and projections of all federal tax measures, such as tax deductions and credits, which are designed to meet economic, social and other goals of the Government-usually by reducing the amount of federal tax otherwise payable by individuals and businesses. These measures are generally referred to as tax expenditures.
This year's report includes an analytical paper entitled "Marginal Effective Tax Rates on Business Investment: Methodology and Estimates for Canadian and US Jurisdictions." Compared to the more commonly used statutory corporate income tax rate, marginal effective tax rates (METRs) provide a more comprehensive indicator of the impact of the tax system on investment decisions because they reflect deductions and credits available through the corporate income tax system as well as other taxes paid by corporations, such as capital taxes. METRs are therefore a useful complement to statutory rates in assessing the international competitiveness of the Canadian corporate tax system.
Estimates and projections in this year's report reflect tax changes introduced in Budget 2005, such as:
- Increasing the basic personal amount (the amount of income that Canadians may earn without paying federal personal income tax) to $10,000 by 2009.
- Introducing a new credit to recognize specified adoption expenses.
- Increasing contribution limits for registered pension plans and registered retirement savings plans.
- Doubling the amount of medical and disability-related expenses that can be claimed by caregivers.
- Increasing the maximum annual Child Disability Benefit to $2,000 per child from $1,681 as of July 2005, making the disability tax credit available to more people and expanding the list of expenses eligible for the disability supports deduction.
Tax Expenditures and Evaluationsmay be viewed on the Department of Finance website. Printed copies are available for $16 from the Department of Finance Distribution Centre at (613) 995-2855.
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Public Affairs and Operations Division
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