Proposed Tax Changes in 2016
With a new government party in charge, Canadians will face some new tax proposals that will likely be rolled out in 2016. We've listed the ones we feel will most affect our clients. As always, if you have any questions or concerns on how they may affect your planning, feel free to give us a call at 705-733-9385.
Tax Free Savings Account (TFSA)
TFSA contributions will be rolled back to their previous annual limit in 2014 to $5,500. Assuming you were 19 in 2009 when the TFSA was rolled out, your lifetime limit will be $46,500 if you’ve not made deposits to a TFSA in the past. Watch for your assessment form after you file taxes in 2016 for directions on how to view your personal contribution room.
Tax Break for Middle Income
The Liberals have proposed a tax break for middle income earners – those earning $45,282 to $90,563 per year. Income tax in this bracket will drop from 22% to 20.5%. The actual dollar amount this will save you depends on your income.
Children under 18
The income splitting strategy (where a working spouse could transfer income to a non-working, or lower-income spouse to save tax) for families with children under 18 will likely be taken away. It was argued that this strategy only helps higher income earners. Income splitting seniors will not be affected.
Child Care Benefits
The current Child Care Benefits and tax credits will be replaced by a Canada Child Benefit (CCB) proposed to be tax free to families and to start at $6,400/year for children under 6 and $5,400 for children aged 6-17. The amount you receive will be based on your family income and will be lowered as the family income rises. We are currently waiting on further details of the plan.
Old Age Security (OAS) and Guaranteed Income Supplement (GIS)
OAS and GIS will be restored to age 65 start date from the former 67 start date for younger Canadians.
**This is our last blog of 2015. We hope you have a great holiday season with family and friends!**