List of References
Prepared by Stephen Tokarick.
For 1998, federal income tax rates were 0 percent for income between $0–$6,456, 17 percent for income between $6,456–$29,590, 26 percent for income between $29,590–$59,180, and 29 percent on income over $59,180. Effective July 1, 1998, a supplement of $500 to the basic personal credit became available to low-income filers, which effectively eliminates the income tax on incomes up to $6,956. The supplement is phased out at a rate of 4 percent of income in excess of $6,956.
Prior to July 1998, all individuals were subject to a 3 percent surtax. Effective July 1, 1998, the 3 percent surtax on incomes less than $50,000 was eliminated, while it was reduced for those with incomes between $50,000 and $65,000. No reduction was granted for those with incomes above $65,000 in order to focus tax relief on low- and middle-income earners. Also, an additional 5 percent surtax applies to individuals who owe $12,500 or more in basic federal tax (those with incomes of approximately $65,000 and above).
An exception is Québec, which administers its income tax separately from the federal tax.
OAS pays benefits to Canadians age 65 and over, based on years of residence in Canada. Benefits are taxable and paid to all qualified individuals. GIS provides additional benefits to low-income seniors based on income and marital status.
In 1997, individuals may deduct contributions to a registered retirement savings plan (RRSP) up to a limit (18 percent of income in 1996 or $13,500) and these limits are frozen at $13,500 until 2004 when the new limit will become $14,500. In 2005, the limit will rise to $15,500 and be indexed thereafter to increases in the average industrial wage.