Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
April 21, 1998
XXXXXXXXXX
Dear XXXXXXXXXX:
Mr. Rob Wright, Deputy Minister of National Revenue, has asked me to reply to your correspondence of January 12, 1998, addressed to Mr. Pierre Gravelle, former deputy minister.
Provincial income tax is based on an individual’s province of residence on December 31 of each year. There is no mechanism under the current legislation to direct one’s provincial taxes to another province.
The personal exemption in respect of age became part of the Income Tax Act in 1948. It was noted in the 1948 Budget Speech that the age exemption was introduced out of consideration for the particular trials and increased expenditures that usually come with advancing years. Many elderly people were living on small pensions or other forms of fixed income with no opportunity to participate in the increased wages, salaries or profits enjoyed by other sections of the community.
The deduction in respect of age was converted into a tax credit (age credit) in 1988. Beginning in 1994, the age credit is reduced where the taxpayer’s income exceeds a base income. Currently, the credit is reduced to nil for seniors with incomes over $49,134. The 1994 Budget Supplementary Information noted that the age credit reduction enables the Government to target help to low- and modest-income Canadians.
Revenue Canada’s responsibility is limited to the interpretation of the Act. The Act would have to be amended in order to eliminate the age credit reduction. Tax policy issues and amendments to the Act are the responsibility of the Department of Finance. I note that you have forwarded a copy of your letter to the Honourable Paul Martin, Minister of Finance.
I trust that my comments have addressed your concerns.
Yours sincerely,
Denis Lefebvre
Assistant Deputy Minister
Policy and Legislation Branch.
Karen Power
March 16, 1998
957-8968