Today, the Auditor General’s 2006 report came down hard on the management of costs of our gun registry. You can soften it with professional accounting terms, but the bottom line is that the gun registry is toast. They blew their budgets but not only that, they lied to parliament about the 2003-2004 fiscal year expenses.

The overrun of about $20 Million needed to be disclosed to parliament and was not. The Liberals will try to downplay it saying they consulted with legal and financial experts, but the bottom line is they still did not disclose it and pushed the expense out to the next fiscal year.

For those that are not familiar with this form of accounting, it is the same type of accounting that got Enron into trouble and is sending people to jail. It’s a shame Canadians are more easy-going than our American neighbours because if this had happened in the USA, there would be several people wearing black and white stripes and eating bread and water right now.

I highly urge you all to give it a gander. Once again, our Auditor General has probably saved Canadians not only millions, but probably billions. I just want to take this space to thank Sheila Fraser and her team.

A job well done.

DISCLAIMER:I am not an accountant and do not profess to be. If anyone out there can correct me if I am way off base please do. If I am off by a few dollars here or there, oh well. It’s close enough for guesstimating.

The goods and services tax (GST) will be reduced by 1 percentage point as of July 1, 2006.

It’s about time. Canadians have been waiting for this one since the Liberals promised it over a decade ago. Yet it took the Conservatives to deliver. I think that tells you a bit about who are the talkers and who are the doers around Ottawa.

Here is a simple calculation to figure out your savings per gas fill up.
Savings per fill up =[0.01(TxP)]
…………………………(1.1342)

where T is Tank Size (in liters) and P is Price of gas (per liter in dollars). Extending this, you could replace TxP with the amount of money you spend on GST taxable goods.

But to stick to gasoline expenses, below is a chart indicating how much you would save annually for 1 to 4 weekly fill ups based on the price of gas (from 90 cents to $1.00 per liter) and tank sizes from 60 to 80 liters.

The green boxes represent size of your gas tank.

DISCLAIMER:I am not an accountant and do not profess to be. If anyone out there can correct me if I am way off base please do. If I am off by a few dollars here or there, oh well. It’s close enough for guesstimating.

From The Budget In Brief, page 9.

A children’s fitness tax credit for up to $500 in eligible fees for physical fitness programs for each child under age 16.

I am going to quote an accountant friend of mine on this tax credit. He said:

A tax credit generally is only a flat rate reduction of income tax of 15% federal and 6.05% provincial, the lowest marginal tax rates, or $110 in this example. It is the same type of deduction as a summer camp or caregiver.

So what does this mean to you? Let me show my my handy dandy table to give you an idea on what it may mean for you.

Now as I have blogged on numerous occasions, the Better Half and I have a couple of active children, ages 9 and 13. I am not positive of the total we spend on their athletic registrations but it is definately over $500 for one and close to it for the other. This means that the new credit will put about $200 back in my pocket.

Thanks Mr. Flaherty. That’s just enough money to get my son a new pair of soccer shoes and pay for one night hotel’s stay when my daughter competes at Provincials later in the month. Or perhaps I could take that savings and buy my kids an RESP!! (I learned that one from reading Brent Colbert) Apparently it shelters the growth from taxes and triggers a matching amount from the government. How sweet is that to have tucked away when the kids apply to post-secondary education?

I hope Canadians are paying attention.

I have written a few things about the 2006 Tory budget here and here. But I am trying to analyze how some of the savings affect the average Joe like me. I will try to put one or two of these up a day as I work through reading the budget.

DISCLAIMER:I am not an accountant and do not profess to be. If anyone out there can correct me if I am way off base please do. If I am off by a few dollars here or there, oh well. It’s close enough for guesstimating.

The Canada Employment Credit is the item I want to talk about today.

The new Canada Employment Credit – a tax credit on employment income of up to $500, effective July 1, 2006, to help working Canadians. The eleigible amount will double to $1,000 as of January 1, 2007.

What does this mean? Well first off, it only applies to Employment income. i.e. it is for those who are WORKING!! If you sit at home riding the dole, or welfare or any other form of non employment income, this is not for you. To take advantage, go get a job. What a concept.

Secondly, it is $500 for the latter half of this year which does equate to a $1,000 a year right away, it just happens to start halfway through the year.

But let’s compare this in a chart that shows how this compensates for the increase in the lowest tax bracket rate from 15.5% to 16%.

The break even point happens to be $32,000. So all you lefty Dippers bitching about this taking money out of the poorest peoples hands. You can all stick it in your ear. Anyone earning under $32,000 will come out ahead. Anyone working from $32,000 and above will see a slight increase. Since we have a progressive tax system, anyone earning above $32,000 will be very slightly behind. This level flattens at about $36,368 (or $37,358 for sticklers who want the $1,000 taken into account). At this point anyone making over this amount would be dropping an extra $21.84 into the public purse.

i.e. it hits those making more and benefits those making less provided it is employment income. I have to stress this point again.

I personally am tossing in the $22 bucks. To make this up, I will have to buy $2200 in GST taxable goods this year, or $1100 in GST taxable goods when the full cut is implemented to make it up. I am pretty sure I far exceed this which should put me in the black.