They say only two things are certain in life: death and taxes. But for once, the government is scaling back its share. With around nine million of Canadians set to see their tax burdens lessened in 2016 thanks to the Canadian government’s newly introduced tax cuts, CREB®Now breaks down some of the small print included in the changes.
With around nine million Canadians making between $45,282 and $90,563 set to see their tax bills decrease in 2016, the total cost to the Canadian government will be $3.4 billion. Single individuals who benefit will see an average tax reduction of $330 every year, and couples who benefit will see an average tax reduction of
$540 every year. The maximum tax reduction will be $679 per individual and $1,358 per couple.
29 per cent
Although those making in excess of $200,000 will see their tax rates increase, the new level of 33 per cent will only apply to income above the $200,000 level. For those earning between $140,388 and $200,000, the existing tax rate of 29 per cent will continue to apply.
While the cost of the new tax guidelines will be offset by a four per cent increase in the tax bills of those making more than $200,000 a year – an increase that will bring in an estimated $2.2 billion – the difference between the two will mean a $1.2 billion shortage in government coffers – a number that could add to the government’s projected $9.8-billion budget deficit in 2016.
Also included under the federal government’s new tax plan is a return to the tax-free savings account annual contribution limit of $10,000. The limit had been reduced to $5,500. The new limit is expected to cost the Canadian government $80 million in 2016 and $150 million in 2017.
Revising rates of refundable taxes on investment income of private corporations is another aspect of the government’s new tax guidelines. While the new corporate rates aren’t quite as cut and dry as those for individual Canadians, the new guidelines are expected to bring in an additional $210 million in revenue in 2016 and $310 million the following tax year.