Peterborough, Ontario – “Tuesday’s announcement with regard to the Tax Fairness Plan is necessary to restore balance and fairness to the Canadian tax system.” says Peterborough Riding MP Dean Del Mastro.

With regard to seniors and income splitting, the plan holds many benefits for seniors in the Peterborough Riding. The plan will allow Canadian residents who receive pension income that qualifies for the current pension income credit to allocate up to half of that income to their resident spouse or common-law partner (provided, of course, that the spouse or common-law partner gives their permission). With a current population percentage of over 18% of seniors (54% of those being married) in the Peterborough Riding, income splitting will provide a well-deserved boost in take-home pension income to our seniors.

This is a plan that a number of seniors groups have been advocating, including Canada’s Association for the Fifty Plus (CARP), the Bell Canada Pensioner’s Group and the Retired Teachers of Ontario.

Another benefit of the Tax Fairness Plan is the $1000.00 increase in the Age Credit from $4,066.00 to $5,066.00 retroactive to January 1, 2006. This will provide up to $155.00 in annual tax relief per year per senior. Age credit is subject to an income test, to target low and middleincome seniors, and unused credit can be transferred to spouse or common-law partner. Phase-out of credit begins at $30,270.00 (indexed to inflation) at rate of 15%, and is completely phased out at $57,377.00 (indexed to inflation).

With regard to Income Trusts, if corporations don't pay their share of taxes, this tax burden will be shifted onto the shoulders of hardworking individuals and families. This is simply not fair. By exploiting the current tax rules, corporations are creating an economic distortion, and sacrificing Canada’s long-term growth for their own short-term gain.

It is the responsibility of the Government of Canada to set Canadian tax policy, and not corporate tax planners. Just this year there have been almost $70 billion in new income trust announcements.

Canada is currently an international outlier in our treatment of income trusts. Both Australia and the United States decided to move away from the current Canadian structure, and the United Kingdom rejected a proposal to adopt the Canadian structure.

Tax advantages of income trusts are largely being realized by non-resident and tax-exempt investors, because Budget 2006 already resolved this issue for Canadian residents.

Changes will apply beginning in 2007 for income trusts that begin to be traded after October 2006, but will not take effect until 2011 for those income trusts that are already publicly traded.