Article

RRSP, CPP and EI contribution limits rise in 2007

RRSP contribution limits rise to a maximum dollar limit of $19,000, which is 18% of $105,555 earned in 2006. This equates to $1,583.33 a month.

Canada Pension Plan Contributions
Both employed and self-employed individuals contribute to the Canada Pension Plan. Remember to adjust payroll source deductions to eliminate source deductions when an employee’s pensionable earnings exceed $40,200 or where employment earnings are under $3,500 in 2007. Where an individual is employed, the employer matches the employee’s contribution. Where an individual is self-employed, the individual funds both parts of the contribution.

Year	Maximum Pensionable Earnings	Basic Exemption	Contribution Rate	Maximum Employee Contribution	Max Self Employed Contribution
2007	$43,700	$3,500	4.95%	$1,989.90	$3,821.40
2006	$42,100	$3,500	4.95%	$1,910.70	$3,821.40
2005	$41,100	$3,500	4.95%	$1,861.20	$3,722.40

Employment Insurance Premiums
Employed individuals and their employers contribute to the Employment Insurance fund. The employer’s contribution is calculated by applying the Employer’s Rate Factor to the employee’s contribution.

Year	Maximum Insurable Earnings	Minimum Insurable Earnings	Premium Rate	Maximum Premium	Employer’s Rate Factor
2007	$40,000	$2,000	1.80%	$720.00	1.4
2006	$39,000	$2,000	1.87%	$729.30	1.4
2005	$39,000	$2,000	1.95%	$760.50	1.4

ON THE BENEFIT SIDE, SOME GOOD NEWS TOO:

Starting in 2007 those receiving periodic pension income can split up to one half of their eligible pension income with their spouse or common-law partners to maximize the use of the pension income amount, the basic personal amounts, and lower marginal tax rates.

A summary of pertinent tax provisions for 2006 to 2007 appears in the following Department of Finance document:

http://www.fin.gc.ca/news06/06-088e.html#Summary%20of%20Federal%20Tax%20Relief%20for%202006%20and%20200

Old Age Security Pension Amounts have not risen for the first quarter of 2007, based on the indexing calculations made by Services Canada:
http://www.hrsdc.gc.ca/en/isp/oas/tabrates/cpioas.shtml

Year	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Total
2007	$491.93	TBA	TBA	TBA	TBA
2006	$484.63	$484.63	$487.54	$491.93	$5,846.19
2005	$471.76	$473.65	$476.97	$479.83	$5,706.63

Old Age Security Benefit Payment Rates January - March 2007
Type of Benefit	Recipient	Average monthly benefit (October 2006)	Maximum Monthly Benefit	Maximum Annual Income
Old Age Security Pension	All recipients	$467.21	$491.93	See note
Guaranteed Income Supplement	Single person	$418.87	$620.91	$14,904
	Spouse of pensioner	$261.30	$410.04	$19,728
	Spouse of non-pensioner	$406.46	$620.91	$35,712
	Spouse of Allowance recipient	$337.29	$410.04	$35,712
Allowance	All recipients	$354.69	$901.97	$27,600
Allowance for the survivor	All recipients	$559.05	$999.81	$20,064

Note - Pensioners with an individual net income in 2007 above $63,511 must repay part or all of the maximum Old Age Security pension amount. The repayment amounts are normally deducted from their monthly payments before they are issued. The repayment is calculated as 15% of net income in excess of $63,511. The full OAS pension is eliminated when a pensioner's net income is $102,865 or above.

AUTO EXPENSE LIMITS REMAIN UNCHANGED IN 2007

The maximum capital cost for new auto purchases stays unchanged for 2007 at $30,000 plus taxes. The same is true of leasing costs ($800 per month plus taxes) and interest expenditures ($300 a month) as described in the following news release from the Department of Finance:

http://www.fin.gc.ca/news06/06-089e.html

UNRECEIPTED TRAVEL EXPENSE CLAIMS RISE IN 2006

Claims for medical travel, moving expenses, and travel under the northern residents deduction may be made on a per kilometre basis. Meals on these trips may also be claimed on a flat rate basis (with a maximum of three such meal claims per day). Rates for prior years are:

	Allowable Rate (cents/kilometre)
Province or territory	2001	2002	2003	2004	2005	2006
Alberta	39.5	39.5	41.5	43.5	45.5	47.5
British Columbia	42.0	42.0	41.5	43.0	45.5	47.5
Manitoba	41.0	41.5	40.5	40.5	44.0	45.5
New Brunswick	42.0	41.5	44.0	43.5	45.5	47.5
Newfoundland and Labrador	43.5	43.5	45.0	47.5	49.0	50.5
Northwest Territories	47.0	48.5	48.5	49.0	52.5	54.5
Nova Scotia	42.0	41.5	44.0	44.0	46.0	47.5
Nunavut	47.0	48.5	48.5	49.0	52.5	54.5
Ontario	42.5	43.5	43.5	45.5	47.0	48.5
Prince Edward Island	41.0	40.5	42.0	44.0	45.5	47.5
Quebec	46.0	45.0	46.0	47.5	50.0	51.5
Saskatchewan	38.5	40.0	39.0	40.0	43.0	44.5
Yukon	48.5	48.0	48.5	50.5	55.0	57.0
Meals – flat rate per meal	$11.00	$11.00	$15.00	$15.00	$15.00	$17.00
Meals – maximum per day	$33.00	$33.00	$45.00	$45.00	$45.00	$51.00

The Claim for Board and Lodging is made on Form TL2:
http://www.cra-arc.gc.ca/E/pbg/tf/tl2/tl2-06e.pdf

AVERAGE EXCHANGE RATES FOR FOREIGN CURRENCIES

Tax and financial advisors preparing income results for 06 will be interested in the following foreign currency exchange rates for December:
http://www.bankofcanada.ca/pdf/nrma06-12.pdf

Average Exchange rates for the year appear below:
http://www.bankofcanada.ca/pdf/nraa06.pdf

This information is used with the permission of Knowledge Bureau, Inc. For more information go to www.knowledgebureau.com.