Canadian Government Highlights Tax Reliefs For 2011

by Mike Godfrey, Tax-News.com, Washington

03 January 2011

The Government of Canada has highlighted important tax changes taking effect in 2011, including:

A reduction from 18% to 16.5% of the federal general corporate income tax rate. "This tax reduction will encourage new business investment, which is an important driver of Canadians’ prosperity. Investment raises productivity, resulting in higher wages, more jobs and improved living standards," the government said.

An increase from 75% to 80% in the deductible portion of meal expenses for long-haul truck drivers for expenses incurred after 2010.

An improvement in the allocation of child benefits between parents who live separately and who share custody of a child. Specifically, these parents will be able to separately receive their related Canada Child Tax Benefit, Universal Child Care Benefit, and child component of the Goods and Services Tax/Harmonized Sales Tax Credit amounts in a particular month or quarter. This measure will apply to benefits payable commencing July 2011.

Implementation of the tax-free rollover of a deceased individual’s Registered Retirement Savings Plan or Registered Retirement Income Fund proceeds to the Registered Disability Savings Plan (RDSP) of a financially dependent infirm child or grandchild. This will give parents and grandparents more flexibility in providing for the long-term financial security of a child with a disability. RDSP contributions under this measure in respect of deaths after 2007 will be permitted after June 2011.

In addition to these changes, starting January 1, 2011, Canadians can contribute an additional CAD5,000 to their Tax-Free Savings Account.

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