2016's New Tax Rules
A fresh new year begins and that also means a fresh new government picking up. There are some major and minor changes we all should be aware of – especially with tax season right around the corner.
Major Changes (Liberal)
– Income of $45,000-$90,000 will experience a drop from 22% to 20.5% (approximate tax savings of $330) – Income of more than $200,000 will experience a rise from 29% to 33%
Flat Tax to Tiered (Alberta)
– Under $125,000 stays at 10% – Over $125,000 will experience a rise from 10% to 12% and to a maximum of 15% – Personal income exemption rises to $18,451 (the highest in all of the provinces)
Tax Free Savings Accounts (TFSA)
– $10,000 to $5,000 – If you have not previously contributed, your available contribution is up to $46,500
Income Splitting Plans
– Still in effect in 2015, but take advantage of it. Get the extra $2000 if you’re eligible (different income, children under 18). This may not be available in 2016 but there is no guarantee
– Increase in higher income bracket, you may want to defer your RRSP contribution and maximize it to get a higher return – Middle income bracket, you may want to maximize it and use it in 2015 to get a higher return on the RRSP – Go with the My Account in CRA to have the access to all of your limits
Do not hesitate to contact us if you have questions, we are more than happy to help you make the right choices!