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1 |
PURPOSE
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1.1 |
The purpose of this directive is
to provide clients with information relative to the tax legislation changes
that are effective July 1, 2005. |
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1.2 |
A notice of information to employees
concerning the above subject has been included with this Compensation Directive.
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2 |
BACKGROUND |
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2.1 |
The following provinces have announced
changes to their tax legislation which will be effective July 1, 2005: |
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- Newfoundland and Labrador.
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2.2 |
The explanations in this directive
will help compensation advisors provide information to individuals concerning
the factors that may cause changes to their pay cheques.
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3 |
POLICY |
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3.1 |
British Columbia |
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On February 15, 2005, the government
of British Columbia introduced a personal income tax reduction for 2005.
This provincial tax reduction will be calculated as follows: |
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- Where net income is less than or equal to $16,000, the premium is
equal to the lesser of (i) basic provincial tax, and (ii) $360;
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- Where net income is greater than $16,000 and less than or equal to
$26,000, the premium is equal to the lesser of (i) basic provincial
tax, and (ii) $360 - [(Annual net income - $16,000) x 3.6%];
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- Where net income is greater than $26,000, the premium is equal to
$0.
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3.2 |
Newfoundland and Labrador |
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On December 16, 2004, the government
of Newfoundland and Labrador announced that a labour-sponsored venture capital
fund has been registered to operate in the province. The maximum amount
an individual can claim for the labour-sponsored fund tax credit is the
total of: |
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- the lesser of 15% of the amount received by the labour-sponsored venture
capital corporation for eligible shares issued in the first 60 days
of 2005, and $750, plus
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- the lesser of 15% of the amount received by the labour-sponsored venture
capital corporation for eligible shares issued for the rest of 2005,
and $750.
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4 |
PROCEDURES/INSTRUCTIONS
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4.1 |
All compensation systems will be
programmed to automatically reflect the new tax rates for payments dated
after July 1, 2005.
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5 |
INQUIRIES |
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5.1
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Any inquiries on
the information contained in this document should be addressed to your Public
Works and Government Services Canada (PWGSC) Compensation Services Office.
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