The New Year brings new tax changes that Canadians needs to be aware of as it may affect their annual tax returns. We have provided a brief overview of the tax changes the new Liberal government is intending to offer Canadians.
The Liberal government is introducing a middle-class tax cut for Canadians which will lower the tax rate for Canadians that earn between $45,282 and $90,563. The rate will be reduced from 22% to 20.5%. The government will increase the tax rates on Canadians that earn more than $200,000 with a tax rate of 33%.
The Tax-Free Savings Account (TFSA) contribution limit which was just increased in 2015 to $10,000 has now been lowered back to $5,500.
The Family Tax Cut which is income splitting will also now be cancelled for 2016 but it will not affect the income splitting for senior citizens.
A Canada Child Benefit (CCB) will be introduced that will replace the Universal Child Care Benefit and the Canada Child Tax Credit. This new tax credit will benefit children up to 17 years of age. The benefit will bring in over $6,400 for families per year for children less than 6 years and those over 6 will receive $5,400. Those households with income over $200,000 will not be able to receive this tax free benefit.
Another tax break that the current government is considering is providing companies with a 12 month discount on Employment Insurance premiums to help create more jobs.
The new changes will affect many Canadians that is why it is important to be prepared and informed of all of these changes. Be sure to follow us on Twitter and our blog for the most recent updates.