With the federal Liberal majority government in Ottawa, we are going to experience some immediate changes to the Tax Act effective as of Jan.1.
Changes already adopted include:
• Change in the federal personal tax rates with the addition of a new tax bracket for those people with incomes in excess of $200,000 of 33 per cent.
The second tax bracket for those with incomes between $45,281 and $90,563 will have the tax reduced to 20.5 per cent.
However, the following bracket for those with incomes over $90,564 will still have to pay 26 per cent.
So the pressure is on to find ways to keep your taxable income level below $90,564.
• The Tax Free Savings Account limit will go back down to $5,500
• The donation tax credit increases to 33 per cent but only if your income is above the $200,000 mark.
Other changes still at the proposed stage currently include:
• The creation of a new child benefit that will absorb the current Universal Child Care Benefit, National Child Supplement and Child Tax Benefit.
This proposal is for a base amount of $6,400 per child under 6 and $5,400 per child who is between the ages of six to 17 that will be tied to family income level and the amounts will be non-taxable.
• The elimination of the family tax cut. The pension splitting would remain and there is a proposal to increase the Guaranteed Income supplement by 10 per cent
• A reduction in EI premiums and an increase in CPP benefits.
• The Northern Residents Deduction increased by one-third and indexed to inflation
• The home buyers’ program made more flexible for those people encountering significant life challenges
• The education and textbook credits are to be canceled and replaced by an increase in student grants. The tuition tax credit would remain
• A new refundable credit called the Teacher and Early Childhood Educator School Supply Tax Credit was supposed to be implemented for 2015 and is a credit for school supplies to a maximum of 15 per cent of $1,000. However, no formal announcement has been made by the government with respect to this credit at this time.
One other item worthy of mention is the Home Accessibility Tax Credit.
This credit can be claimed on an annual basis and is limited to 15 per cent of $10,000 per year of expenses incurred after 2015. These expenses must have been incurred to renovate the home to make it more accessible or to reduce the risk of harm for the person living there.
In order to qualify for this credit you must be 65 or older or be eligible for the Disability Tax Credit.