Expected Changes from the New Government
Posted 22 Oct 2015 by Natalie LeBlanc & Melissa Allan
The Federal Government, under new Liberal Prime Minister Justin Trudeau, cited several family-finance-based measures during their campaign. While not all of these may apply to you, at least one or two will affect your finances:
Changes to the TFSA contribution limit: The annual contribution limit has fallen back to $5,500 from the current (although new for 2015) $10,000 limit.
Eliminating income splitting: This measure allows a higher-earning spouse (in a family with kids under 18) to transfer a portion of their income (up to $50,000) to the lower-earning spouse, to be taxed at their lower rate. The maximum tax break under this measure is $2,000. Note: this change doesn’t affect pension income splitting for seniors!
Not raising OAS eligibility age: During their campaign, the Liberals had said they would not gradually raise the age of eligibility for Old Age Security which was due to be increased to 67 years old.
Middle class tax cuts: The Liberal’s will surely uphold this promise to cut the middle income tax bracket to 20.5 percent from 22 percent – a seven percent reduction. Canadians with taxable income between $44,700 and $89,401 could save as much as $670 per year on income tax.
Tax increases over $200,000: Those making more than $200,000 per year will see a higher income tax rate than before. The highest combined marginal tax rate will be above 50 per cent in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia.
Canada Child Benefit: This will provide an extra $2,500 tax-free per year for a typical family of four, replacing the current Universal Child Care Benefit. However, families with household income of $200,000 or more will not receive this benefit. You can play with the online tax calculator to see what your family can expect on the Liberal web-site http://www.liberal.ca/realchange/helping-families/
Children’s Fitness Tax Credit: The children’s fitness amount is expected to change to a refundable tax credit for 2015 and subsequent years. This amount will no longer show on your federal income tax schedule but it expected to show on a new line on page 4 of the T1 return.
Home Buyer’s Plan: The Home Buyers’ Plan currently focuses on first-time buyers, and the Liberals discussed allowing other uses of this plan; people would also be able to use the plan multiple times (currently not available) when moving for employment, after a marital breakdown, after the death of a spouse, or to take care of an elderly relative within their home.
Student loan repayment: Grads would not be required to repay student loan debt until their income reaches $25,000 a year. Also, the maximum Canada Student Grant for low-income students would rise to $3,000 annually for people studying full time.
Of course, most of these changes are pending and based on statements and promises made during the Liberals campaign and changes may occur. Further details on these changes can be found by searching www.cra.gc.ca or www.liberal.ca.
Source: Carrick, Rob. Nine ways your family finances will change under a Liberal government. 20 October 2015. The Globe and Mail. http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/nine-ways-your-family-finances-will-change-under-a-liberal-government/article26886456/
This article contains general information only and is intended for informational and educational purposes. Some of the information and opinions contained in this article are reprinted from (The Globe and Mail). This article should not be taken or relied upon as providing legal, accounting or tax advice. You should obtain your own personal and independent professional advice, from your lawyer and/or accountant, to take into account your particular circumstances.