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Tax Changes in 2016. Are you Impacted?

What you need to know about the government’s proposed changes to our tax structure.

Canada’s recently elected federal government has proposed a number of changes to how we’re going to be taxed. These proposed changes include:

  • Increase the federal tax rate on annual income of over $200,000 from 29% to 33%
  • Decrease the second-lowest tax rate from 22% to 20.5% for Canadians earning between $44,700 and $89,401 (based on 2015 figures)
  • Rollback the Tax-Free Savings Account (TFSA) annual contribution limit from $10,000 to $5,500. No timeline has been specified; however, it is unlikely to be retroactive for 2015
  • Maintain reduction in the small business tax rate from 11% to 9% for Canadian-controlled private corporations
  • Cancel the previous government’s Family Tax Cut Credit – an income splitting measure that allows some families with children under 18 years of age to reduce their tax bill by up to $2,000
  • Replace the Universal Child Care Benefit, Canada Child Tax Benefit and National Child Benefit Supplement with a new Canada Child Benefit that is income tested and tax free
  • Loosen qualification rules for the Home Buyer’s Plan to allow more Canadians affected by sudden and significant life changes to access their Registered Retirement Savings Plan (RRSP) for a down-payment on a second home
  • Restore the traditional retirement age to 65 on Old Age Security and Guaranteed Income Supplement eligibility
  • Although there are no updates to the tuition tax credit, there will be updates made to both the education and textbook tax credits so that money is in the form of upfront and non-repayable grants that go directly to students
Call our office today to discuss your overall financial plan, along with how these proposed taxation changes may impact your financial circumstances.
* Please note that these changes have not passed into law as of December 2015.

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