From today’s editions of the Moncton (NB) Times and Transcript
Before you are spooked later this evening, you may want to think about trying to influence Ottawa into providing seniors with a treat.
It’s the time of year when the people in the Finance Department shape the year-end economic statement normally delivered sometime in the next couple of months. It also allows a number of trial balloons of a tax nature to be floated. One that has been off the radar for a number of years now, but that has become very hot as of late is in the area of income splitting for seniors.
Many people are aware that Garth Turner, MP for Halton is currently sitting as an Independent. Before his life in politics Mr. Turner was a financial commentator with his finger on the tax and investing community. One of his concerns has been in the area of championing the issue of perceived unfairness in the area of senior taxation. It’s been suggested that federal Finance Minister Jim Flaherty has not heard much from the affected constituency, so it’s been on the outside edge of his radar’s periphery. However, in response to a question from Mr. Turner, Mr. Flaherty indicated that he was considering the allowance of senior couples to split pension income for tax purposes.
A number of years back the Canada Pension Plan began to allow couples the opportunity to split payments out of the program. While this may have limited benefit for very low income seniors, it certainly makes a difference for anyone who has additional retirement income. That’s because the tax we pay is based on how much we make – the more, the more! By transferring some of the income into the lower earning spouse’s hands, a couple can reduce the total tax liability.
For those beginning to take their CPP at age 65, the maximum amount of retirement benefit annually is slightly more than $10,000. In addition, there is the Old Age Security which pays just under $6,000 in 2006. A couple that each received OAS and with one of the spouse’s qualified for maximum CPP and a pension from employment of $25,000 paid a combined total tax of $6,474 in 2005. By splitting the CPP payment with the lower income spouse, the combined tax bill was lowered by more than $75 a month. By further splitting the employment pension, the total family tax bill would be less than $5,000.
Some people might question whether this is fair. An argument could be made that we need to look at the sociological structure of those in retirement. While it is less common today to see the traditional nuclear family of the dad out working and the mom home with the kiddies, indeed this is the case for many of the folks currently in retirement. While there has been a long on-going debate on whether stay-at-home parents should be entitled to contribute to CPP, the answer is currently no. When the child rearing is done, often the returning to the workforce parent is too late to pick up with a career that has significant retirement benefits. Family practice lawyers continually make the case that these types of assets should be split upon marital breakdown. Splitting retirement income from a tax perspective just extends the argument and allows more money to be left in the home, when the ability to earn any substantial income has ceased – a position I believe most Canadians would deem to be fair.
While it would be a legislative nightmare to try and get all the affected stakeholders on side – pension providers, legislators, RRSP carriers to name but a few – the same result could be accomplished by a relative simple administrative change directly on the tax return, much like the way investment income is reported.
It is common practice to split interest income reported on a T5 based on the percentage of contribution to the bank account. For instance, if the slip reports $100 in interest, as long as both spouses report a cumulative total of $100, the reporting arrangement is generally not questioned. In fact, most computerized tax packages have a percentage reporting field built right into this module of the software.
One would assume that a direction to the Canada Revenue Agency to allow taxpaying couples the opportunity to split retirement income in the same way would be the quickest and easiest way to implement this consideration. It’s probably a good time to let your federal representative know your thoughts if you feel that this would be both an appropriate and fair consideration for seniors. It’s seems a shame to have retired couples feeling tricked into paying more than their collective share.
Roger Haineault is with Help 4 Taxes. His column “Tax Help Plus …” appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 855-HELP (4357) or by e-mailing roger@help4taxes.ca
Also of interest: Be Green, just like Uncle Sam
The Halifax Chronicle Herald, October 31, 2006
13 comments ↓
â€Many people are aware that Garth Turner, MP for Halton is currently sitting as an Independent…â€
Well you’d never know it if you relied on MacLeans for your news. I’ve trusted them for many years for impartial and detailed coverage of national stories, and eagerly awaited the latest copy to see how they spun Mr. Turner’s situation. His name was mentioned once, in a brief story about Michael Ignatieff. I dug last week’s copy out of the recycle box, thinking maybe I’d missed it -– nothing. MacLeans has apparently decided that Mr. Turner’s expulsion from the Tories is not worthy of comment.
Fascinating…….
I completely agree with this and have told my MP Gord Brown, my MPP Bob Runciman, my Mayor Bill Gooch and all my councilors,,, they all support it. Why isn’t the government?
It sounds fair to me….
and the thing is it does not cost all that much (really) in lost tax revenue. I don’t know the numbers, but apparently its “peanuts” in the grand scheme of things.
Its the RIGHT thing to do!
Garth,
I’m a Milton resident who voted for Gary Carr in the last election. I would put my X beside you now. The former decision was influenced by Stephen Harper’s agenda, which is the reality in a flawed system where only one vote makes several decisions. Stephen Harper ‘removed you from the fray’ and my suggestion is that you would do well to stay above it as an independent.
I believe in fiscal responsibility balanced with social progression. I most often associated myself with the PC party, but have always prioritized the individual issues over ‘group think’. I have thoughts on a number of issues. Human and civil rights should not be discriminatory and thus marriage should not be subject to gender limitations. There are clear indications that long-term economic viability is the latent effect of a system that mandates environmental responsibility today. A violent peace-keeping mission is a war, and Afghanistan won’t be lead to peace amid violence. I agree with your concerns about dual-citizenship, but I believe that innocents should be freed from war (as in the Israel/Lebanon conflict)…your point was right, but your timing was off. I have two young children and provisions for child care need to be improved. There is greater collective advantage to pooling the child care benefit than issuing it to individual households where it, unto itself, isn’t enough to create alternate child care options. One of my biggest concerns is the lack of clear direction for improving education at all levels, lest we face tremendous economic struggle with structural unemployment in an increasingly globally competitive world as time passes. Frankly, I have no problem paying taxes…I would even go so far as to say I enjoy it. My frustration is that those taxes are juggled, and bungled, through 3 levels of government and thus, 3 levels of inefficiency thereby squandering the effectiveness of my contribution.
My views don’t necessarily match any given party platform and, until now, couldn’t have been fully represented due to party-imposed limitations. This is true for all your constituents. However, you are now free and able to leverage your position for change, which is something our political system needs desperately. As Canadians, we are tremendously apathetic and those who actually take an interest and vote have such poor options that they are unable to establish a majority government. You have an opportunity to blaze a political trail and if I can be of assistance, please keep my information and let me know how.
Dear MP Turner!
We want to express our support for your brave stand, representing your Riding with our free speech.
Sorry to say, we have very few MP like you, our MP GODFREY never ever ask our opinion, we havn’t see him one year….representing only himself !
DEMOCRACY IS DEADA in CANADA!
We should have a revolution for replacing our rotten, corrupt election system!
We voted for damned Harper…he betrayed us…he forced Canadian another war without our vote!
When we will have MP like you in our Don Valley West?
WE ARE WITH YOU MP TURNER!
One comment in this article is questionable, re CPP legislation. It is my understanding that a parent that chooses to stay home to take care of a child will (upon request) be credited with up to 7 years of payments to CPP following the date of birth. A subsequent birth restarts the clock at year one. It is not granted unless specifically requested.
Garth, while you are trumpetting enviro causes, why do you drive an SUV?
And why dont you tell us a little bit about your experiences in “The Waffle” (an extremely Leftist sect of the NDP)
Whoa, Big Brother! Interesting research you’re doing. All the way back to 1968 when I was a card-carrying member of Mel Watkins’ gang to promote Canadian economic nationalism. And I had shoulder-length hair. And an earring! Arrest me! I guess the old adage applies in this case – we are all born socialist, learn to walk, get a job and become Tories. Then Indie.
As for the SUV, you bet. It’s the dog car, parked proudly beside my motorcycle. Woof. — Garth
From the Globe and Mail on possible cooperation between the Tories and the NDP to pass a climate change bill: “The Tories and the NDP combined, have more votes in the House than the Liberals and the Bloc Quebecois, 153 to 151 respectively. But, a Tory-NDP alliance would also have to win the support of one of the two independent MPs sitting in the House in order pass any legislation.”
Looks like your vote could be crucial.
“The Tories and the NDP combined, have more votes in the House than the Liberals and the Bloc Quebecois, 153 to 151 respectively. But, a Tory-NDP alliance would also have to win the support of one of the two independent MPs sitting in the House in order pass any legislation.â€
Looks like your vote could be crucial.
-Jane Anderson
Well INTERESTING as that may be, there are 2 seats in the process of a by election that will complicate that equation.
One suggestion … (from past history is that) is that one seat will be won by the Bloc and one won by the Fiberals. So that would be two more votes for the NON NDP-Tory Alliance. So if they (Harper CPC) want to do something, like move legislation forward with the NDP ( green plan/clean air act) then the Harper Tories may want to act FAST. (if that is possible in Ottawa)??
Liberal & Bloc could be at 155 after the by elections
then
Tory and NDP are at 151 (still)
and there are still two independents (Grath is one) and sadly, if the Bloc and the Liberals vote together then votes of the independents don’t really matter if all the opposition party (Bloc and Liberal) members are present. (155)
Once again, in the by elections if the Bloc or the Liberals win even one seat (either party) AND if they vote together as a block they will have 154 votes leaving three voters/seats out of the current 151 combined Tory NDP total. ALL three votes would have to go to the TORY NDP alliance bloc JUST to cause a tie, in which case I understand the Speaker breaks the tie and would vote for the Conservatives because I believe the speaker is from the conservative party.
Anyone? Correct me if I am wrong
comments?
So bottom line if you are playing Politics like chess in a strategy game and you are Stephen Harper and you call two by elections “to test the wind” and your party loses BOTH of them, you are sunk! I say this because those seats were held by Liberals and Bloc members in the past and when the current parliament was formed they DID have the 155 votes they needed to control the agenda and defeat any legislation they wanted, but the Bloc and the Liberals did not govern, they just sat (the Liberals) in opposition.
My prediction is the Liberals or (Green surprise upset!) will win London and the Bloc will win the Quebec seat and then Harper will be in a really tight spot. It was a BAD gamble IMHO. (strategically speaking)
sorry
Bad math and I did not read the post I was responding to correctly.
the last post above is ALL wrong
I would like to withdraw my comments because I the numbers are wrong
the
Liberal & Bloc could be at 153 after the by elections
then
Tory and NDP are at 153
then the two independent votes would be critical
(Ignore my first post)
thanks
In respect to the comments of TOM TORRANCE regarding stay at home child caring parent being eligible[upon request]for credit of up to 7 years CPP
payments.
If this is so,were can one obtain additional info on eligibility and request prceedures?
A little more math. At present, the conservatives have 124 seats and the NDP 29, so yes, their coalition equals 153. Assuming, as you do the extra seats go to the PQ and Liberal party while they will have 153 seats their effective voting power is only 152 seats.
This is because the Speaker of the House, the Rt. Hon. Peter Milliken of Kingston, does not vote.
So, after by-elections, the Bloc/Liberal vote would need both Independants to forward their cause… if either were to vote with the government, the government’s side would “win”.
If one independant voted with the opposition, and the other abstained, we would have a deadlock — 153, 153 — whereby the speaker would vote to continue the status quo (allow the bill to live if it’s before third reading, kill the bill on third reading, or allow the government to continue on votes of confidence/no confidence).
Fun, fun, fun!
F.J.SHAN
The child rearing drop-out provision (CRDO) prevents the stay-at-home parent from being penalized for staying at home to rear young children. See http://www1.servicecanada.gc.ca/en/isp/
pub/factsheets/chidropout.shtml
Or google ‘”CPP Application” CRDO’