2007 Manitoba Budget Impact Paper

This paper was prepared by the Compensation Sector, Accounting, Banking and Compensation Branch, Public Works and Government Services Canada (PWGSC). It should be noted that this document is not all encompassing. Employees may find this document informative from a personal perspective.

The following items, which are relative to the compensation product, were introduced in the Manitoba budget speech that was presented by the Honourable Greg Selinger, Minister of Finance for the Government of Manitoba on April 4, 2007.

ITEMS AFFECTING PWGSC COMPENSATION SYSTEMS

Personal Income Tax Rate

The tax rate in the middle tax bracket will decrease from 13.0% to 12.75% and the middle and highest tax bracket thresholds will increase from $65,000 to $66,000 and from over $65,000 to over $66,000 respectively, effective January 1, 2008.

Impact: PWGSC compensation systems will be programmed to reflect this change effective January 2008.

Basic Personal Amount

The basic personal amount will be increased by $200 to $8,034 effective January 1, 2008.

Impact: PWGSC compensation systems will be programmed to reflect this change effective January 2008.

Spousal and Eligible Dependent Amount

The maximum spousal and eligible dependent amount will be increased from $6,482 to $8,034 effective January 1, 2008.

Impact: PWGSC compensation systems will be programmed to reflect this change effective January 2008.

ITEMS OF INTEREST

Tuition Fee Income Tax Rebate

The budget introduced a new Tuition Fee Income Tax Rebate. Graduates of post-secondary institutions, on or after January 1, 2007, can claim 60% of eligible tuition fees paid on or after January 1, 2004. The maximum lifetime rebate is $25,000 and unused claims can be carried forward for up to 20 years.

Impact: This change will be incorporated into the 2007 income tax return.

Manitoba Children's Fitness Credit

Effective January 1, 2007, the Manitoba Children's Fitness Credit will parallel the new federal Children's Fitness Tax Credit. The intention to parallel the federal program was announced in the 2006 Federal budget.

Impact: This credit will be incorporated into the 2007 income tax return.

Pension Income Splitting

Effective January 1, 2007, Manitoba will parallel the new federal pension income splitting measure.

Impact: This change will be incorporated into the 2007 income tax return.

Family Tax Benefit

Effective January 1, 2008, the Family Tax Reduction will be replaced by the Family Tax Benefit. This change does not affect eligibility or reduce benefits for any taxpayers but was done to streamline the tax process.

Impact: This change will be incorporated into the 2007 income tax return.

To review the 2007 Manitoba budget documents, please visit this site:

http://www.gov.mb.ca/finance/budget07/index.html