Every year, the government (municipal, provincial, federal) produces their annual budgets which in turn provides us with our tax laws for the current and upcoming years. After 10 years with a Federal Conservative Government, as taxpayers we had time and history to know what to expect. This past Fall (2016), Canada voted for change which resulted in a Federal Liberal Government. This brought about many changes, some expected and some unexpected. But at the end of the day, tax is tax and we all have to pay our share…so here is my summary of what I believe is important to my family, friends, clients and community.
Universal Child Care Benefit
For the past couple of years, parents have been receiving a taxable benefit (extra money in your pocket each month) of $160 and $60 for children under and over 6, respectively. June 2016 will be the last payment of this UCCB.
Canada Child Tax Benefit
This is the monthly non-taxable payment some families receive to help with raising children and is based on your families income. June 2016 will be the last payment of the CCTB.
Fitness & Arts Tax Credit
This credit has been eliminated altogether for 2017 and has been reduced to half of the amounts for 2016. New amounts for 2016 are $500 for fitness and $250 for arts.
Education & Textbook Tax Credits
This was a credit for taxpayers attending post-secondary and has been eliminated altogether for 2017 and onwards. Tuition will remain an eligible credit.
Canada Child Benefit (NEW)
This is basically the combination of the UCCB and CCTB (just a new name) which will take effect in July 2016. Again, the amount will be determined based on a families income, how many children and will not be taxable.
Teacher & Early Childhood Educator School Supply Tax Credit (NEW)
This is a new credit for 2016. Where teachers spend up to $1,000 out of their own pocket, they will be eligible for a tax savings of up to $150. Remember to save your receipts.
Northern Residents Deduction (INCREASE)
The maximum residency deduction per household member has been increased from $8.25 to $11 per day.
Personal Tax Rates for 2016
For those earning more than $200,000 in taxable income, the top tax rate has been increased by 2% while the middle tax bracket has received a 1.5% tax break.
Charitable Donations for the Top
For those with taxable earnings over $200,000 and making charitable donations, they will receive a 33% tax credit on donations over $200. For those under $200k, the donation credits will remain the same.
Small Business Corporate Tax Rate
Previous budgets included a reduction of .5% each year until 2019. The latest budget has frozen the reduction and will keep the small business tax rate at 10.5% after 2016.
Incorporation Costs (NEW)
Previously incorporation costs were not a deductible expense in the year incurred but rather was amortized each year. The current budget is allowing up to $3,000 in incorporation fees to be fully deductible as a current year expense.
This is just a brief summary of the changes. Click here for all the details. Or if the full document puts you to sleep 😉 and you have come across something that I haven’t specifically commented on here, please call or email me.
Remember to always seek the advice of a Professional CPA.
***This blog is for information only and not to be used as tax advice or planning without first seeking professional advice. Information is also subject to change without notice.