GST and Income Tax cuts announced

[return to the red]

^^ up to a certain amount 350k I think it starts diminishing

[greyshep]

Originally Posted by ken0042

Regarding the GST on houses, I seem to recall that when GST went down from 7 to 6% that houses were not affected; because GST on new homes is less than 5% with the rebate you get from the gov't.

Not anymore. That was when the average price of a home was far less than $400,000.

It was a sliding scale rate where the more expensive your home was, you paid more GST. Kind of a luxury tax if you will. The bigwigs who were building $350k+ home at that time were paying full gst. Joe average who was spending $150-200k were seeing gst rates of around 3.5-4% I believe. Funny how things have changed. A $350k home is now a starter home.

I believe there was some low level noise about having these rates adjusted again, but I dont think anything ever happened as this was a federally administered plan which would obviously effect new home prices throughout the country.

[mykalberta]

I dont like the whole minibudget garbage.

If I wanted a whorish populist party I would vot Lib.

Leave this stuff till the official budget. I like the GST down by 5 because its easier to calculate

[ZDogg]

Originally Posted by mykalberta

... I like the GST down by 5 because its easier to calculate

Thats what I like too. Maybe the 5% rate will help us get rid of the stupid Penny once and for all. That should save the government (and taxpayers) some money over the long run.

[Bring_Back_Shantz]

I think some of the confusion about GST for homes is because of how it's calcualted.
As far as I know, you only pay ~ 3-4% because essentially you get a rebate for the GST that was already paid on materials, and you really only pay GST on the labour.
How this will affect what you pay based on posession date I'm not sure.

[return to the red]

http://www.cra-arc.gc.ca/tax/individ...ntially-e.html

regarding GST and rates on new or renovated houses

[MarchHare]

Originally Posted by fotze

What would the average family spend per year? Bills have GST I think, like Shaw, phone and all that. Gasoline, some grocery items. $35,000 spent possibly, would be $350.

I ran the math for my budget a few years ago. At the time I was earning a gross salary of about $42k, and of that, I calculated that only about $10k was spent on things that are subject to the GST (housing, groceries, RRSP contributions, etc. account for the lion's share of my net income). Assuming I still spend a similar portion of my net salary on GST-applicable items, a 1% cut would save me only about $100 per year...which works out to about two extra Starbucks coffees per month.

[MacDougalbry]

On a $500,000 new home you will save $5000. On a $300,000 new home, you will save $1920. This change will probably be effective on contracts signed after today for possessions after Jan 1, 2008.

[ken0042]

Originally Posted by MarchHare

a 1% cut would save me only about $100 per year...which works out to about two extra Starbucks coffees per month.

Or, another way to look at it....... for me these cuts work out to about $300-400 per year. Pretty much what we got from Uncle Ralph a couple of years ago. But instead of getting some program together (which has the potential to be abused or mis-managed) to hand out cheques, they are giving us tax breaks.

Works for me!

[flamesaresmokin]

I'd be happy if they'd leave gst alone and lower income taxes to a more reasonable level for the middle bracket....comparitvely it is the worst bracket to be in and most canadians are in that bracket.

[The Yen Man]

Originally Posted by ZDogg

Thats what I like too. Maybe the 5% rate will help us get rid of the stupid Penny once and for all. That should save the government (and taxpayers) some money over the long run.

Not when pyschological pricing still continues to come into play, and items are priced $9.99 instead of $10.00.

[loob job]

I'm an accountant in the homebuilding industry and here's what we got from the Canadian Homebuilders Association. This should answer the house questions in this thread.


OTTAWA, October 30, 2007

– The Harper government’s decision to cut the GST to 5 per cent,
effective January 1, 2008, will significantly improve housing affordability, the Canadian Home
Builders’ Association (CHBA) said today.
“This is great news for both home buyers and owners,” CHBA President Richard Lind said. “It
will help all owners who are considering renovations and all Canadians who make major
household purchases.”
Mr. Lind said that the announcement in Finance Minister Jim Flaherty’s Economic Statement
fully honours the Conservatives’ 2006 election commitment to reduce the GST by two per cent.
“We are pleased to congratulate a government that keeps its campaign promises.”
He welcomed transitional rules for the further 1 per cent reduction. This reduction applies to
homebuyers who purchase after October 30 and take possession after January 1, 2008. As well,
those who purchase before October 30 and take possession after January 1 will be able to apply to
Canada Revenue Agency for a transitional rebate that reflects the reduction to 5 per cent.

[MaDMaN_26]

Originally Posted by Bobblehead

http://www.cra-arc.gc.ca/tax/individ...axrates-e.html

so basically, if you make equal to or over $37,178 dollars you will save $185.89 a year in personal income tax... right?

[MaDMaN_26]

Also can some number guy help me understand what this means to the average joe?

- Basic personal exemption jumps to $9600 retoractive to Jan.1,'07

[MarchHare]

Originally Posted by MaDMaN_26

Also can some number guy help me understand what this means to the average joe?

- Basic personal exemption jumps to $9600 retoractive to Jan.1,'07

It means that you pay 0% income tax on the first $9600 that you earn in a year.

[Stranger]

Originally Posted by ZDogg

Thats what I like too. Maybe the 5% rate will help us get rid of the stupid Penny once and for all. That should save the government (and taxpayers) some money over the long run.

This may be the govrnments plan. First we got to bone up on our seven and six times tables and now we get to practice our five times tables.

[MaDMaN_26]

Originally Posted by MarchHare

It means that you pay 0% income tax on the first $9600 that you earn in a year.

ok, that makes sense... what did the number used to be?

Oh and since the 15% is on the first "Taxable" income then you'd have to be making $46,778.00 or more in order to realize the full $185.89 savings per year with .5% cut. ($37,178.00 + $9,600.00)

[return to the red]

Originally Posted by Stranger

This may be the govrnments plan. First we got to bone up on our seven and six times tables and now we get to practice our five times tables.

that's funny coming from a guy with Ralph Wiggum in his avatar

[albertGQ]

Originally Posted by MaDMaN_26

ok, that makes sense... what did the number used to be?

Oh and since the 15% is on the first "Taxable" income then you'd have to be making $46,778.00 or more in order to realize the full $185.89 savings per year with .5% cut. ($37,178.00 + $9,600.00)

I think it was $8700 (give or take). No, the tax bracket is for the first $37,178. So if you made exactly $37178 in taxable income, you pay ($37178-$9600=$27,578*0.15=)$4,136.70 in taxes.

Under the previous system, you would pay (37178-$8700=$28478*0.155=)$4,414.09

So you would save a total of $277.39

[ericschand]

Originally Posted by MaDMaN_26

ok, that makes sense... what did the number used to be?

Oh and since the 15% is on the first "Taxable" income then you'd have to be making $46,778.00 or more in order to realize the full $185.89 savings per year with .5% cut. ($37,178.00 + $9,600.00)

What it means is that for the first $9,600 you make, you will pay no
federal taxes.

From $9600.01 to $37,178, you will pay 15%.
Then from $37,178.01 to $X, you pay a little more. And so on.

There are some very good tax calculators for Canadians at:
http://www.walterharder.com/index.asp

ers