With the lengthy election now over, I’m sure all of us Canadians are happy to get back to life as we know it, although it will be interesting times when the House reconvenes. Justin Trudeau and the Liberals have made some election promises that could significantly impact Canadian taxpayers, so we thought we would provide a quick overview of what may lie ahead.
Tax Bracket Changes
Trudeau has vowed to cut taxes from 22% to 20.5% for the middle tax bracket which are those with taxable incomes between $44,701-89,401. Conversely, tax increases are on the horizon for individuals earning more than $200,000 annually. The proposed legislation would see a 4% tax increase from 29% to 33% for those taxpayers.
Tax-Free Savings Accounts (TFSA)
Remember the increase in annual contribution limits that the Progressive Conservatives introduced earlier this year? They increased the annual limit from $5,500/year up to $10,000.
The Liberal government has plans to nix this increase and resume the annual contribution limit of $5,500. The logistics of how and when they will make this change remains to be seen. There is discussion that they could potentially make the change retroactive to 2015, but such a move will create an administrative nightmare and frustration for the Canadian taxpayers who opted to increase their 2015 contributions when the limit increase was announced.
Universal Child Care Benefit (UCCB)
At present, the UCCB provides taxable cheques of $160/month for children under six and $60/month for children ages 6-17. The Liberals promise to replace the UCCB with a new benefit that will be tax-free and income-tested. Thoughts are this new Canada Child Benefit will be of benefit to Canadian families.
Education Tax Credits
Presently, there is a federal non-refundable tax credit for education and textbooks in addition to the tuition tax credit. The Liberals plan to replace these credits with an increase in non-repayable grants, which they feel will better target students from low and middle-income families.
Justin Trudeau’s election platform was one of “Real Change” with a focus on providing more support to middle income families in Canada.The Party also talks of corporate income tax reforms as well, so it sounds like there is change in the air.
If you have any questions regarding any of these changes, don’t hesitate to contact us to discuss how they may impact your particular situation.