Ottawa, June 30, 2006
2006-030

Archived - Canada's New Government Provides Substantial Tax Relief Beginning July 1

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The Honourable Jim Flaherty, Minister of Finance, reminded Canadians of tax changes that will take effect July 1, 2006.

"In Budget 2006, Canada's new government introduced more than $26 billion in tax relief over the next two years, of which over 90 per cent will go to individuals," Minister Flaherty said.

Effective July 1:

  • About 655,000 low-income Canadians will be removed from the tax rolls altogether.
  • The GST will be reduced to 6 per cent from 7 per cent. This will put almost $9 billion into the pockets of Canadians over the next two years.
  • Working Canadians will become eligible for the Canada Employment Credit on up to $500 of annual employment income to help pay the additional costs of employment-costs for things like uniforms, computers or safety gear. Next year, the amount of employment income eligible for the credit will increase to $1,000.
  • The lowest personal income tax rate will be permanently reduced to 15.5 per cent.
  • The basic personal amount-the amount that an individual can earn without paying federal income tax-will increase each year and remain above previously legislated levels for 2005, 2006 and 2007.
  • Canadians who buy monthly transit passes will get a tax credit. A person who buys passes costing $80 a month will receive about $150 a year in federal tax relief. That will save commuters $370 million over the next two years.
  • Excise duty on Canadian wine produced with 100 per cent Canadian agricultural products is eliminated, a reduction of 62 cents a litre.
  • Excise duties are reduced on the first 75,000 hectolitres of Canadian-produced beer. All Canadian brewers will enjoy excise duty savings of about $2.30 on a 24-pack of 341 ml bottles on their first 2,000 hectolitres of production per year.
  • The minimum tax on financial institutions will be modified as of July 1, 2006, which will reduce government revenues by $15 million in 2006-07.

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For further information, media may contact:

Dan Miles
Director of Communications
Office of the Minister of Finance
613 996-7861
David Gamble
Media Relations
Department of Finance
613 996-8080

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