Every tax planning decision you make is based on how it will impact you with respect to your Marginal tax rate. RSP contributions, taxable investment income, whether to take on that extra income, deductible expenses, etc. All of these decisions require us to first know our Marginal Tax Rate and then, the next significant tax bracket below our current one.
Tax time may not be fun but paying taxes is one of the requirements for the privilege of living in Canada. Canada is a great country and although we may not all agree how our governments spend our money, paying more in taxes than we’d like is the price of democracy and better than the alternative! So we must pay our fair share – but not one penny more. If you are preparing your own taxes this year the website below is a nice intro to get you started:
With a liberal government majority we will see some tax changes. These are the tax benefits are what we can expect.
- For those that earn more than $200,000 per year the Liberals will introduce a new 33% tax bracket, up from 29%, Expect this to happen almost immediately.
- Middle-class clients will have a few more dollars to invest once the Liberals drop the tax rate for those earning between $44,700 and $89,401 from 22.5% to 20%, a nice round number.
- The Universal Child Care Benefit is gone to be replaced by the non-taxable Canada Child Benefit. The most-needy benefiting to the tune of $533 per month per child. Those earning over $300,000 get nothing.
- Also gone is one of the most controversial pieces of the Conservative’s tax plan – income splitting for families. Unless couples have a wide spread in incomes with the top earner less than $75K this will not impact you.
- The $10,000 TFSA contribution limit for 2015 will likely be rolled back to $5,500 in 2016, exactly where it was prior to the change in June from the Conservatives.
- Starting in 2017, EI premiums will be reduced by 23 cents per $100 earned to $1.65. While a smaller cut than the Conservatives were promising, it still puts more money in the hands of your clients.
- Ontario Premier Kathleen Wynne suggested during the federal election campaign that if Justin Trudeau was elected as prime minister the expansion of the CPP might result in the scaling back or elimination of ORPP.