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CAUT Bulletin Archives

April 2005

Budget 2005

Tax Policy Announcements

There were some interesting tax changes proposed by the federal government in its Feb. 23, 2005 budget. Among the more significant changes were the following:

  • Increasing RRSP contribution limits to $19,000 in 2007 and to $22,000 by 2010.
  • Increasing the money purchase registered pension plan contribution limits to $19,000 in 2006, $20,000 in 2007, $21,000 in 2008, $22,000 in 2009 and indexed to average wage growth beginning in 2010. Corresponding increases will be made to defined contribution plan limits.
  • Eliminating the current foreign investment limit of 30 per cent for RRSPs, pension plans and other tax-deferred retirement plans.
  • Increasing the maximum refundable medical expense supplement from $571 to $750 for the 2005 taxation year.
  • Progressive increases to the basic personal amount tax credit available to taxpayers by $100 in 2006, an additional $100 in 2007, by $400 in 2008 and by the greater of $600 or the amount necessary to bring the basic personal amount to $10,000 in 2009. In addition the personal credit for a dependant spouse, common-law partner or wholly dependent relative is proposed to rise to $8,500 by 2009 ($85 increase in both 2006 and 2007, $340 in 2008 and $510 or higher in 2009).
  • For 2005 and later years a 16% non-refundable tax credit for eligible adoption expenses to a maximum of $10,000 for the adoption of a child under the age of 18. The credit is claimed in the year the adoption is finalized.
  • 2005 Automobile Deduction Limit: The limit on tax-exempt allowances paid by employers to employees will increase by 3 cents to $0.45/km for the first 5,000 kilometres driven and $0.39/km for each additional kilometre (42 cents on the first 5,000 kilometres and 36 cents on each additional kilometre for 2004). Additional amounts apply to designated northern areas.
  • The carryforward period for non-capital losses has been extended from seven to 10 years, for losses incurred in taxation years ending after March 22, 2004.
  • The political contribution tax credit has been revised for political contributions made in 2004 and later years and the 75 per cent credit will apply on the first $400 (previously $200) of contributions.
  • Accelerated capital cost allowance claims apply for certain computer equipment purchased after March 22, 2004.

These and other changes have been included in CAUT's 2004 Income Tax Guide, available online here at or by contacting Louise D'Anjou.

CAUT's 2004 tax guide was edited by Roy Williams, senior partner of Rheaume Williams Kalbfleisch in Ottawa. Although CAUT cannot pay for individual tax counselling or tax advice, individual members with such questions can contact Mr. Williams at 613-236-4500 ( and take advantage of CAUT-negotiated rates.