Tax Time In Our Beloved Canada!
Once again it’s that time of year that those pesky taxes are due. Taxes are a necessity but they don’t have to be treated as a chore. Quite often they can yield beneficial returns and also help you get better acquainted with your finances. Canadians are currently facing a number of changes that will effect tax and benefit amounts nationally and provincially. Becoming familiar with these changes will help if you’re filing your own taxes or have a greater understanding of what benefits you qualify for. Handing off your taxes to an accountant is an excellent way to ensure they are done correctly and that any returns and allowances are caught. Even if you prefer this service, understanding your own money is essential to budgeting and distribution of income. “For 2017, we have five federal tax brackets: zero to $45,916 (15 per cent), $45,916 to $91,831 (20.5 per cent), $91,831 to $142,353 (26 per cent), $142,353 to $202,800 (29 per cent), with anything above that being taxed at 33 per cent, the new high-income bracket introduced by the government in 2016, (source).” Here is a quick breakdown of some of the changes Canadians will be seeing on their 2017 tax returns.
“The federal government is ending four child tax credits this year: arts, fitness, education and textbooks in 2017, (source).” Nationally the government is also cancelling income splitting for families, which was a tax reduction measure that allowed a parent to transfer up to $50,000 of income to a spouse with lower income if they had a child under 18. The tax credit for income splitting has now been capped at $2,000. Despite this families are not to worry as “high-income earners in most provinces will pay more but for the majority of Canadians, these two changes will mean more money in their pockets,” Canadian Taxpayers Federation federal director Aaron Wudrick, (source).” This is good news for lots of Canadian families as they now have the Canadian Child Benefit that was introduced in 2016 to cover childcare expenses as well.
The other changes nationally are related to life insurance and business owners looking to sell. Starting January 1 the tax treatment of life insurance policies will be less desirable as new policy holders will see a decrease in the ability to build investment gains on a tax free basis. Policies will also get more expensive and reduce some death benefits.
Business owners large and small will receive less income from the sale of their businesses due to trademarks and goodwill becoming fully taxable.
First let’s take a peak at B.C. The biggest change will be in the change in medical services plans with prices slightly increasing (okay a little more than slightly). Premiums are also getting ditched for any children and young adults that are attending school.
Our Albertan friends are getting a reduction in small business corporate income tax rates from 3% to 2%. A carbon tax is also being rolled out on the purchase of fossil fuels with a new rebate for low to middle income brackets.
Ontarians will get an eight-per-cent rebate on rising hydro bills and also first-time homebuyers’ maximum land transfer tax refund is getting bumped up to $4,000 and the province is also introducing its carbon cap and trade system.
Overall these small changes will not greatly affect the so called “average Canadian” earner. “There are a few changes that are unique for 2017 but the average Canadian is not going to see much difference between 2016 and 2017,” said Jamie Golombek, managing director of tax and estate planning for CIBC Wealth Advisory Services, (source).” Having an understanding of tax changes is essential to keeping tabs on your money and tax returns. Hopefully this provided a great starting point for some of the most recent changes and provides an outline to dive deeper into areas that spark your interest. If you have any questions about the changes or want to talk further, contact me at at → email@example.com