Greater access to deductions and non-refundable tax credits

Under the simplified tax system, the flat amount - set at $2 780 in 2002 - replaces a certain number of deductions and non-refundable tax credits.

Beginning in the 2003 taxation year, the following deductions and non-refundable tax credits will be granted under the simplified tax system, in addition to the flat amount:

• the deduction for support payments;
• deductions for residents of designated remote areas;
• non-refundable tax credits for medical expenses;
• a series of deductions including the deduction for moving expenses and the deduction for certain expenses incurred to earn investment income, and other tax credits such as the foreign tax credit.

Furthermore, the new deductions that can be claimed under the simplified tax system will be taken into account in the calculation of family income. This change will improve the tax credits and transfer programs that are calculated on the basis of family income.

These measures will benefit close to 640 000 households and decrease their tax burden by approximately $78 million, or $122 per household concerned.

Thus, 145 000 households with persons aged 65 or over and 27 000 single-parent families will see their taxes cut by an average of 4%.

This measure will be of particular assistance to low- and middle-income households. The tax reduction will amount to 30% for 83 000 households with an income below $25 000, and 7% for 249 000 households earning between $25 000 and $50 000.