How the federal government’s new tax cut might impact you

The federal government is currently working on large-scale tax cuts that should make impact on Canadian’s first pay stubs in the new year.

So, what are the amendments to the Income Tax Act? We’re here to help you understand exactly what these changes are and how it impacts you.

Tax cuts for the middle class.

The Finance Minister introduced a motion to raise the basic personal amount, the spouse or common-law partner amount, and the amount for an eligible dependant. This would gradually raise the threshold of income exempt from federal income tax to $15,000 for single taxpayers and $30,000 for those with a dependant spouse or eligible dependant by 2023. Here’s a look of how the rollout will look like:

YearExisting Basic Personal AmountProposed Basic Personal Amount
2020$12,298$13,229
2021$12,554$13,808
2022$12,783$14,398
2023$13,038$15,000

No big change for the high class.

Canada’s one per cent isn’t going to see this change, as the government has proposed to exclude top earners from benefiting from the raised threshold, meaning, the increase is only happening in the lower tier tax brackets. The increase in the basic personal amount would be phased out for individuals with net incomes above $150,473 in 2020, and eliminated for taxpayers earning $214,368 or more. Those in the higher tax brackets will only continue to receive their existing amount, tabulated against inflation.

The low down on how much you’ll actually save.

So, what does this translate to in tax savings? The government projects that 20 million Canadians’ taxes will be cut as a result, once it is fully phased in, saving single Canadians $300 in tax a year, and saving families an estimated $600.

What does this mean for you if these proposed changes come to fruition? If you have any questions, visit an H&R Block office near you to learn more.

Source

admin

OTTAWA'S RETIREMENT PLANNING BLOG If you have questions about retirement or financial planning then take a look here. Tons of articles & information on Canadian financial planning topics such as life insurance, investing and more.There are still a lot of misconceptions about money & retirement planning. I just want to help you retire when you want and how you want. As a Registered Retirement Consultant-RRC® and independent adviser, I share my unbiased knowledge to help you have a better understanding of investing, insurance and financial planning.Getting on track for retirement doesn't have to be confusing or complicated. Get the information you need to avoid mistakes and be Ready For Retirement!