Supporting Canada’s Pensioners and Seniors

Fall 2006 CSANews Issue 61  |  Posted date : Jun 01, 2007.Back to list

Canadian pensioners and seniors have spent a lifetime building this great country of ours. With selfless determination and dedication they established careers, raised families and paid their taxes. They set us on a path to economic success and prosperity.

Now they deserve to enjoy a long and healthy retirement.

Canada’s new government values the contribution of our pensioners and seniors. As a result we have taken significant positive steps to improve the financial situation of those living on a fixed income.

On October 31 our government announced, as part of our Tax Fairness Plan, pension income splitting for spouses and common-law partners. This measure will come into effect on New Year’s Day 2007 and will result in substantial savings onthe tax payable on pension income.

For example:

  • A couple with a single pension income of $30,000 will save over $1,100 in taxes.
  • A couple with one partner collecting a $40,000 pension will save approximately $2,500 in taxes.
  • A couple with one partner collecting a $60,000 pension will save approximately $2,700 in taxes.

This is money that will go directly back into the pockets of pensioners and seniors. Pensions that qualify for income splitting are Registered Pension Plans, RRSP annuities, RRIFs and DPSP annuities.

Pension Income Splitting is of particular significance because of Canada’s aging population. There was a generation where it was common for only one person or one partner to work outside the home. Many of those couples are currently living on one pension and paying the high marginal individual tax rate on that one pension. This historic, and long overdue, measure will provide much needed financial relief for pensioners and seniors.

In addition to pension income splitting, Canada’s new government announced an additional, broad-based, senior income tax reduction by increasing the Age Credit Amount by $1,000 from $4,066 to $5,066. This measure will provide relief to low and middle-income seniors.

These two initiatives will enhance the initiatives our government announced in Budget 2006. Within 100 days of taking office, we delivered on our commitment to seniors withfocussed and meaningful tax relief.

These measures are:

  • A doubling in the amount of eligible pension income that can be claimed under the pension income credit – removing 85,000 pensioners from the federal tax rolls altogether.
  • Reducing the GST from 7% to 6%; and
  • The introduction of a transit pass credit providing people with up to $150 in savings a year.

We have certainly made good progress, but our government believes Canadian families and seniors still pay too much tax. We are taking every opportunity to ease the tax burden, reduce the debt, maintain a balanced budget and act in a fiscally responsible way.

This past November I had the honour of releasing our government’s long-term economic plan for Canada, Advantage Canada. This sets out a bold new course for a strong and united Canada. It is premised on the belief that Canada is a great country and is among the world’s safest, cleanest and most prosperous nations on earth.

A key component of Advantage Canada is setting a new national goal of eliminating Canada’s total government net debt in less than a generation. This is an unprecedented fifteen-year commitment on behalf of Canada’s new government to pay off our national mortgage and provide ongoing tax relief for all Canadians.

From this year forward, every dollar of every surplus of the Government of Canada will be applied to bringing down the debt. As we pay down Canada’s national debt, the interest savings generated will be returned directly to Canadian taxpayers each and every year through a reduction in personal income taxes.

This “Tax Back Guarantee” will give everyone a direct stake and a direct benefit in how we manage government finances on their behalf. It will mean lower taxes, lower interest payments and lower debt for your children and grandchildren.

Advantage Canada is the first long-term economic plan of its kind in over 20 years and it is long overdue. Canadian families have an economic plan and so to should the Government of Canada. It’s important to know where we are going and how we plan to get there.

Our government is standing firmly on the side of Canadian families, students, workers, pensioners and seniors. We will continue to work in the best interest of all Canadians and focus on the priorities that are important to you andyour family.