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Federal Budget 2003

AUTOMOBILES

The standby charge for employer owned automobiles will be less onerous. A reduction in the standby charge will be allowed if personal kilometers are less than 20,000 and the vehicle is used 50% or more for business.

Presently, the business kilometers must be at least 90% to access the reduced standby charge.

RRSPs

The Press has been lobbying for increases to the RRSP limits. The Budget did increase the limits but only on a graduated basis:

2003 - $14,500
2004 - $15,500
2005 - $16,500
2006 - $18,000

As we have been promised this style of graduated increase before, only to find out that scheduled annual increases were withdrawn by the Finance Minister of the Day, we recommend that taxpayers only focus on the bird-in-the-hand which, for now, is a $1,000 increase.

SMALL BUSINESS

Private corporations long have been given a preferential low corporate tax rate for retained earnings in the business. The amount has been locked for several years at $200,000 annually. Thus, an "inflation adjustment" is long overdue. However, it must be remembered that this preferential rate only applies to an entrepreneur's earnings in a corporation in excess of the wages required to be withdrawn by the entrepreneur to sustain life style. Thus, only very profitable and/or inexpensive lifestyle situations will benefit from this.

The Small Business Tax Rate Limit will be increased from its present level of $200,000, on a phased-in basis:

2003 - $225,000
2004 - $250,000
2005 - $275,000
2006 - $300,000

CHILD BENEFITS

The National Child Benefit, a part of the Child Tax Benefit which provides additional assistance to low income families, will be increased in July 2003, 2005, and 2006. The income thresholds for qualifying for the benefit will also increase.

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