Some 2017 Tax Code Changes for Canadians
2017 ushered in a number of changes to the way Canadians are taxed and what benefits are delivered through the tax system. The changes include changes to tax brackets, the basic personal amount, Canada Pension Plan contributions, EI premiums, as well as several limits (including the RRSP Limit and the TFSA contribution Limit). The Federal government is also eliminating four tax credits (the art, fitness, education, and textbooks tax credits) and cancelling income splitting for families, but is offsetting some of the eliminations with changes to the Canada Child Benefit.
The changes to the federal tax brackets are due to their inflation indexation (1.4%). The 2017 tax brackets are zero to $45,916 (15%), $45,916 to $91,831 (20.5%), $91,831 to $142,353 (26%), $142,353 to $202,800 (29%), and over $202,800 (33%). The provinces have their own tax brackets and rates. Remember that the higher rates of progressive tax brackets only apply to the dollars above the limit. For example, if you earned $46,0000, the first $45,916 is taxed at 15% and only $84 is taxed at the higher rate of 20.5%.
The basic personal amount, and Canada Pension Plan and EI limits, as well as the RRSP limit are all also indexed to inflation and are slightly higher. The one contribution limit that is frozen at 2016 amounts is the TFSA limit, which is still $5,500.00.
The elimination of income splitting for families applied to families with a child under 18 years of age, and was worth a maximum of $2,000. However, this maximum amount was only available to very high income earners where the spouse did not work, and as such won’t have much effect on the majority of Canadians.
The new Canada Child Benefit is meant to simplify the number of smaller benefits provided to families with children. This benefit automatically rolled in in July 2016, and the benefits are a maximum of $6,400/year for each child under the age of 6 and a maximum of $5,400/year for each child between 6 and 17 years old.
There are other changes both federally and provincially that may affect you or your family based on your personal circumstances.
NOTE: Faris CPA can help you figure out what tax changes apply to you and how they affect you and your family. Articles are for general information only and do not constitute tax advice nor can they be relied upon.