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47-564: The creation of the WITB was announced in the November 2005 Economic and Fiscal Update. It was scheduled to enter into force on 1 January 2008. In its first budget , the newly elected Harper government reiterated the intention of the federal government to go forward with the implementation of the WITB. The WITB was ultimately implemented by the 2007 Canadian federal budget , a year earlier than planned initially. The 2018 Canadian federal budget replaced

94-441: A Canadian resident for income tax purposes of at least 19 years of age as of December 31, and cannot be a full-time student. The WITB can be claimed on line 453 (45300 since the 2019 tax year) of the income tax return if their income exceeds $ 3,000 for the calendar year. However, the additional paperwork required to claim the credit is complex, involving a 42-step process on Schedule 6 of Canada's main income-tax form. As of 2016,

141-450: A harmonized sales tax (HST). In Quebec both GST and QST are collected and administered together by the provincial government. British Columbia had an HST from 2010 until 2013, when it was removed after a provincial referendum . Alberta and the territories of Yukon , Northwest Territories and Nunavut have the GST but no provincial or territorial sales taxes. The goods and services tax

188-560: A demonstrable result. Nova Scotia raised the provincial sales tax 2 points as part of deficit-fighting measures under the Dexter government; this was put in place on July 1, 2010. The second cut was later announced in the 2007 Throne Speech and officially confirmed on October 30, 2007 during an economic statement update on the country finances. The budget was met with dissent by the Liberal and New Democratic parties and mostly positive reception from

235-538: A formula. Ontario and British Columbia both harmonized the GST with their provincial sales tax (PST) effective July 1, 2010. However, the British Columbia HST was defeated in an August 2011 mail-in referendum by a 55% majority vote, and was converted to the old GST/PST system effective April 1, 2013. On the same day, Prince Edward Island enacted HST at the rate of 14%. In Ontario, the HST totals 13%; however, many of

282-508: A mixture of lack of awareness and the complexity of the forms required to claim the benefit. CRA is working to increase uptake by expanding its support for free volunteer tax-preparation services and by scaling up a 2016 pilot project in New Brunswick, which highlighted the program to persons likely eligible for the program and was judged to have had a "positive impact." 2006 Canadian federal budget The Canadian federal budget for

329-441: A previous hidden 13.5% manufacturers' sales tax (MST). Introduced at an original rate of 7%, the GST rate has been lowered twice and currently sits at rate of 5%, since January 1, 2008. The GST raised 11.7% of total federal government revenue in 2017–2018. In five provinces, Nova Scotia , New Brunswick , Newfoundland and Labrador , Ontario and Prince Edward Island , the GST is combined with provincial sales tax (PST) into

376-629: Is defined in law at Part IX of the Excise Tax Act . GST is levied on supplies of goods or services purchased in Canada and includes most products, except certain politically sensitive essentials such as groceries, residential rent, medical services, and services such as financial services. Businesses that purchase goods and services that are consumed, used or supplied in the course of their "commercial activities" can claim "input tax credits" subject to prescribed documentation requirements (i.e., when they remit to

423-467: Is not completely effective, as shown by criminals who defrauded the system by claiming GST input credits for non-existent sales by a fictional company. Exported goods are "zero-rated", while individuals with low incomes can receive a GST rebate calculated in conjunction with their income tax . The tax is a 5% tax imposed on the supply of goods and services that are purchased in Canada, except certain items that are either "exempt" or "zero-rated": In 1989,

470-466: The Progressive Conservative government of Prime Minister Brian Mulroney and his finance minister Michael Wilson proposed the creation of a national sales tax of 9%. At that time, every province in Canada except Alberta already had its own provincial sales tax imposed at the retail level. The purpose of the national sales tax was to replace the 13.5% Manufacturers' Sales Tax (MST) that

517-629: The TSX Capped REIT Index , which is exempt from the "Tax Fairness Plan," gained 3.2% in market value. According to the Canadian Association of Income Funds, this translated into a permanent loss in savings of $ 30 billion to Canadian Income Trust Investors [2] . Harper later mentioned that this was "the toughest decision for the government." The Canadian Press voted the Harper Government and Jim Flaherty "Business Newsmaker of 2006" for

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564-555: The 2006 election campaign, the Martin government proposed income tax cuts for lower-middle-income earners. The Liberals claimed that the GST cut would effectively result in a tax increase for those in the lower-middle-income bracket . The Conservatives argued that the GST cuts would benefit all Canadians, including low-income earners and those outside the workforce who do not pay income tax. The first GST cut went into effect on July 1, 2006, and no provinces have raised provincial sales tax as

611-582: The Bloc. The Liberals and NDP voiced disapproval over the Conservatives following through on their election promise to replace the Liberals' child care policy with their own, and for replacing Canada's $ 4 billion environmental policy with a $ 2 billion "made in Canada" plan of their design. The budget received widespread support among the business community and polling indicated that a clear majority of Canadians approved of

658-473: The Canada Revenue Agency the GST they have collected in any given period of time, they are allowed to deduct the amount of GST they paid during that period). This avoids "cascading" (i.e., the application of the GST on the same good or service several times as it passes from business to business on its way to the final consumer). In this way, the tax is essentially borne by the final consumer. This system

705-567: The Department of Finance's assertion that the United States and Australia took action to shut down flow-through structures. In his research paper, Digging Deeper , he gave a perspective on how the United States taxes publicly traded flow-through entities and Master limited partnerships , the US equivalent of Canadian Income Trusts. In a January 12, 2007 paper, Yves Fortin outlined his concerns regarding

752-638: The GST was promoted as revenue-neutral in relation to the MST, a large proportion of the Canadian population disapproved of the tax. The other parties in Parliament also attacked the idea as did three Progressive Conservative Members of Parliament , David Kilgour , Pat Nowlan , and Alex Kindy , who ended up leaving the Progressive Conservative caucus as a result. The Liberal -dominated Senate refused to pass

799-588: The Harper-government assertion that the Trust structure led to a loss of tax revenue because of trust conversions in his research paper. Income Trusts and Tax Leakage: Is there a problem? Analyst Gordon Tait also raised concerns about the lack of consultation and misconceptions surrounding the change in tax policy on Trusts in The Inconvenient Truth About Trusts . Analyst Cameron Renkas refuted

846-452: The House of Commons. Amid an apparent mix-up, no Members of Parliament rose to speak. Thus, the budget was declared passed by unanimous consent a week ahead of schedule. Initiatives to be delivered over periods ranging from one to five years: The Conservative government promised to lower the federal Goods and Services Tax from 7% to 6% in its first budget and to lower it to 5% by 2011. During

893-455: The House that the intentions people have do not always fully manifest themselves. Goods and Services Tax (Canada) The goods and services tax ( GST ; French : Taxe sur les produits et services ) is a value added tax introduced in Canada on January 1, 1991, by the government of Prime Minister Brian Mulroney . The GST, which is administered by Canada Revenue Agency (CRA), replaced

940-445: The MST's replacement could only be expected to influence prices over time and not on a stroke. Despite the opposition, the tax came into force on January 1, 1991. A strong Liberal Party majority was elected under the leadership of Jean Chrétien in the 1993 election . The Progressive Conservative Party fared very poorly in that election, winning only two seats. Although the party recovered somewhat in subsequent elections, it remained

987-597: The Minister to break his election promise and tax income trusts, either the Minister is in contempt of the committee’s motion or he had absolutely no data from his own department before shutting down the sector and destroying tens of thousands of Canadians’ life savings. The first possibility is disturbing, the second is deplorable." The Conservatives had the support of the Jack Layton and the NDP on this issue. The government postponed

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1034-622: The Senate for approval. This marked the first time in Canadian Parliamentary history where a government's budget passed unanimously on the third and final reading. On September 25, 2006, the Conservative government announced that within the fiscal year, there was a $ 13.2 billion surplus that will be used to pay down the country's debt. Economist Yves Fortin challenged the reasons for the change in tax regime announced by Flaherty and disputed

1081-561: The WITB is worth up to $ 1,028 for a single individual and $ 1,868 for couples and single-parent families. Benefits increase and then decrease with income. At an income of $ 18,529 for single individuals or $ 28,576 for families the benefits decrease to $ 0. WITB is estimated to benefit 1.4 million working Canadians annually, at a cost to the federal government of CDN$ 1.2 billion. In October 2017, the Liberal government of Justin Trudeau promised to expand

1128-478: The WITB with the new Canada Workers Benefit (CWB). The CWB is an enhanced version of the former WITB as it provides increased benefits and has a higher income level at which the benefit is phased-out completely. The Canada Revenue Agency will also automatically test eligibility to the CWB when taxes are filed in order to increase accessibility to the program. To be eligible for the CWB, the applicant or their spouse must be

1175-523: The announcement to tax Income Trusts on Halloween. In a July 9, 2007 interview on Business News Network , former Conservative Alberta Premier Ralph Klein criticized PM Stephen Harper and Finance Minister Jim Flaherty for their mishandling of the Income Trust issue and for not keeping their word on Income Trust taxation. [3] According to the Canadian Association of Income Trust Investors ,

1222-599: The benefit by $ 500 million annually, beginning in 2019. Consistently since 2009, only about 85% of all working Canadians eligible for the WITB have claimed their benefit, with particularly low uptake in Atlantic Canada and the Prairie provinces . In 2017, this left an estimated CDN$ 175 million in benefits unclaimed by 240,000 eligible low-income Canadians. This is thought by the Canada Revenue Agency (CRA) to be due to

1269-457: The bill an indication of what Canadians should expect from his Conservative minority government. Many aspects of the bill were criticized by opposition parties. The Liberal Party and New Democratic Party indicated that they would not support the budget, while the Bloc Québécois indicated that it would vote in favour of it. On June 6, 2006, the budget was introduced for a third reading in

1316-580: The budget. While it initially appeared that the only way the Conservatives' budget would pass would be with the support of the Bloc Québécois , the budget passed third reading without dissent on June 6, 2006, when the members of the Opposition failed to stand after the Deputy Speaker of the House called for debate. Because there were no speakers for the Opposition, the budget was declared passed with unanimous support and no recorded vote and thus forwarded to

1363-513: The campaign for the 2006 Canadian federal election , the Conservative Party pledged to reduce the GST immediately by 1 percentage point and thereafter by another percentage point in the next five years. That pledge was criticized by then Finance Minister Ralph Goodale as favouring the "biggest spenders" who would receive the biggest savings. On July 1, 2006, the Government of Canada reduced

1410-423: The change in tax rules cost investors $ 35 billion in market value. [4] Stephen Harper specifically promised "not to raid Senior's nest eggs" during the 2006 Federal Election. [5] Order, please. There seems to be some confusion in the House. It is my understanding that the bill to which the hon. member is speaking is Bill C-13 which was just passed. We have now moved to debate on Bill C-10. [...] It may have been

1457-421: The checkout. To accommodate these exemptions, many retailers simply display each tax individually as HST 1 and HST 2 (or some variant). The move to HST came about as part of Ontario's 2009 provincial budget. Only three provinces (British Columbia, Manitoba , and Saskatchewan ) continue to impose a separate sales tax at the retail level only. Alberta is the exception, not imposing a provincial sales tax. During

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1504-492: The claim of tax leakage. In his October 31, 2006 policy statement, Finance Minister Jim Flaherty said, "If left unchecked, these corporate decisions would result in billions of dollars in less tax revenue for the federal government to invest in the priorities of Canadians, including more personal income tax relief" [1] but Minister Flaherty did not document his allegation or cite any research to back up his claim. Mr. Fortin's paper A Recipe For Tax Loss gave several examples of how

1551-495: The federal government imposed at the wholesale level on manufactured goods. Mulroney claimed the GST was implemented because the MST was hindering the manufacturing sector's ability to export competitively. Manufacturers were concerned that the tax hurt their international competitiveness. The GST also replaced the Federal Telecommunications Tax of 11%. The introduction of the GST was very controversial. Although

1598-590: The fiscal year 2006–07, was presented to the House of Commons of Canada by Finance Minister Jim Flaherty on May 2, 2006. Among the most notable elements of the federal budget were its reduction of the Goods and Services Tax by one percentage point, income tax cuts for middle-income earners, and $ 1,200-per-child childcare payment (the Universal child care benefit ) for Canadian parents. Prime Minister Stephen Harper called

1645-502: The intention of some members [to debate a third reading] but before I took the Chair I observed what I thought to be the passage of Bill C-13 without any dissent, or division for that matter. I believe the matter has now been decided. [...] The Speaker did call for debate when the question was put on third reading and no one rose. The question was then put on third reading and the bill was carried without dissent or division. It sometimes happens in

1692-529: The most and spend the most the largest tax decrease. Much of the reason for the notoriety of the GST in Canada is for reasons of the Division of Powers in the Constitution. Other countries with a Value Added Tax legislate that posted prices include the tax; thus, consumers are vaguely aware of it, but "what they see is what they pay". Canada cannot do this because jurisdiction over most advertising and price-posting

1739-554: The pre-HST exemptions remain affecting only the provincial portion of the HST (for example, prepared food under $ 4.00 is not subject to the provincial portion of HST and is only taxed at 5%). On the other hand, some items that were only subjected to the PST are now charged the full HST (i.e., 13%). Although the Government of Ontario has made efforts to provide documentation as to what items are affected and how, this causes some confusion for consumers as they are often not sure what taxes to expect at

1786-673: The report, Mr. Lever asked: Special hearings by the Finance Committee commenced January 30, 2007. John McCallum , the Liberal Finance critic called on Minister Flaherty to explain the reasoning behind the change in Income Trust Tax policy. In a February 8, 2007 news release, John McCallum is quoted as saying, "essentially they released close to a thousand pages of public documents, not one of which brings Canadians any closer to understanding what type of information or calculations led

1833-653: The smallest party in the House of Commons until it disbanded itself permanently in 2003, and merged with the Canadian Alliance to form the Conservative Party of Canada . During the election campaign, Chrétien promised to repeal the GST, which the Liberals had denounced while they were the Official Opposition, and replace it with a different tax. Instead of repeal, the Chrétien government attempted to restructure

1880-535: The tax and merge it with the provincial sales taxes in each province. They intended to call it the "Blended Sales Tax", but opponents quickly came to derisively call this proposal the " B.S. Tax", and the name was changed to Harmonized Sales Tax before its introduction. However, only three Atlantic provinces ( Nova Scotia , New Brunswick and Newfoundland and Labrador ) agreed to go along with this plan, joined by British Columbia and Ontario in 2010, and Prince Edward Island in 2013. British Columbia later repealed

1927-556: The tax by 1 percentage point (to 6%). They again lowered it to 5%, effective January 1, 2008. This reduction was included in the Final 2007 Budget Implementation Bill (Bill C-28), which received Royal Assent on December 14, 2007. This change has been estimated to have decreased government revenues by approximately $ 6 billion. Opponents of these tax decreases cited that sales taxes target those who spend more and therefore such reductions disproportionately benefit Canadians giving those who have

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1974-658: The tax from taking effect until 2011 for existing trusts. The government argued that it could now allow giant corporations to convert as proposed by BCE for its Bell Canada subsidiary, "...a move that would save it $ 800 million in tax by 2008." Subsequent to the October 31 announcement by Flaherty, the TSX Capped Energy Trust Index lost 21.8% in market value and the TSX Capped Income Trust Index lost 17.6% in market value by mid November 2006. In contrast,

2021-552: The tax into law. In an unprecedented move to break the deadlock, Mulroney used a little-known constitutional provision (Section 26 of the Constitution Act, 1867 ) to increase the number of senators by eight temporarily, thus giving the Progressive Conservatives a majority in the upper chamber. In response, the Opposition launched a filibuster and further delayed the legislation. Despite the tax being lowered to 7% by

2068-455: The tax on income trusts could lead to a loss in government tax revenue, not a gain. Analyst Dirk Lever wrote on January 15, 2007, "We cannot understand why any Canadians would support double taxation of retirement benefits - it affects all of us eventually." Mr. Lever also cited several flaws in the Conservative government's policy in his research paper Deep Dive into Tax Issues: Canadian Pensioners Taxed Twice on Canadian Corporate Dividends . In

2115-404: The tax. The decision not to abolish or replace the GST caused great controversy. Liberal Member of Parliament (MP) John Nunziata voted against the Liberal government's first budget and was expelled from the party. Heritage Minister Sheila Copps , who had personally promised to oppose the tax, resigned and sought re-election. She was re-elected with ease in the subsequent by-election , as

2162-491: The time it became enacted, it remained controversial. What the tax covered also caused anger. The Government defended the tax as a replacement for a tax unseen by consumers because it was placed on manufacturers, and in the long run it was posited that removing the MST would make Canada more competitive. Once the MST was replaced with the GST prices did not initially fall by the level some thought appropriate immediately; however, proponents have argued that in Canada's market economy

2209-500: Was the Liberal government in the 1997 election . In 1997, the provinces of Nova Scotia , New Brunswick and Newfoundland (now Newfoundland and Labrador ) and the Government of Canada merged their respective sales taxes into the Harmonized Sales Tax (HST). In all Atlantic provinces, the current HST rate is 15%. HST is administered by the Canada Revenue Agency, with revenues divided among participating governments according to

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