GST cut to 5%

October 31st, 2007 Categories: Vancouver Real Estate

What do you think about the tax cuts in Harper’s budget last night?

GST has been cut to 5% effective January 1, 2008, which will help housing affordability as the GST is charged on all new homes. The reduction is applicable to homewoners who purchase after October 31, 2007 and take possession after January 1, 2008. As well, if you purchase before October 30,2007 and take possession after January l, 2008, you can apply to the Canada Revenue Agency for a transitional rebate that reflects the reduction to 5%.

In addition, Canada’s economy grew at 0.2% pace in August, faster than the market forecast for a 0.l% gain. In the July-august period, the economy expanded at a 2% annualized pace in the compared to the 3.4% average of the second quarter, setting up for a more moderate 3rd quarter, following 6 months of robust expansion. The employment cost index for the 3rd quarter showed that the index advanced 0.8% in the quarter and 3.3% relative to a year ago. Wages and salaries grew 0.8%

Also in the budget - the government will lower the corporate income tax t0 19.5% next year, l% point more than planned, from just over 22% today and further cuts going forward to 2011. These massive tax cuts and higher energy prices have brought an investment climate to Canada that is of historical proportions.

Effective this year, personal taxes for the lowest income tax bracket will be cut by half a percentage point to 15% and personal exemption rates for all taxpayers will be raised to C$9,600. Because the two personal income tax cuts are retroactive to 2007, the measures will give instant tax relief to many workers as employers adjust to the new rates. The cuts are thought to help protect the world’s 8th largest economy from the effects of a US slowdown and a surging canadian dollar.

The Loonie soared on the above news, exceeding a 47 year high to $1.0610 against the U.S. $

I think the budget will bode well for the Canadian economy, more companies will be moving to Canada and creating jobs. Our economy will grow and this will all be positive for real estate.

What do you think of Harper’s budget? Are the cuts good for you? Will the GST reduction and lower income taxes help you to buy a new home ?

Now all we need is a reduction in the 50% capital gains tax!!