Continuing the series we began earlier this month, your CPA accountant in Calgary has prepared some important information regarding tax changes that could affect you following the recent change in federal government. Income splitting, higher taxation for high earners, and changes to Harper’s Child Care benefit are only the beginning – read on to learn more from your CPA accountant in Calgary.
The Times They Are A-Changing
For the first time in over a decade, Canadian voters have opted for a radical change in their federal government. On October 19th, Justin Trudeau’s Liberals sailed to a majority government, buoyed by their message of change. Trudeau earned nearly 40% of the popular vote and a total of 184 seats in the House of Commons. This year’s voting turnout was the highest since 1993, indicating that more people than ever are invested in bringing change to the Canadian infrastructure.
Much of the change has been celebrated. Namely, the Liberals promised to cut the middle income tax rate for those making between $44,000-$89,000 a year. It’s a welcome move, and something that Harper had been criticized for omitting in favour of boutique tax credits.
However, it’s not all good news, depending on your current income bracket and tax situation. Building off of the article released earlier this month, here are three more liberal tax changes that will affect Canadians in drastically different ways, prepared by your CPA accountant in Calgary:
Taking Tax Free Savings Accounts Back in Time
As of this article date, the limit for annual TFSA contributions was set at $10,000 annually. With the new Liberal cabinet moving in, this will likely be reverted back to $5,500 per year, which is bad news for taxpayers who plan to save and invest – now, more investment income will be taxable. This could change people’s retirement planning, as withdrawals from a TFSA did not affect Old Age Security (OAS) benefits. A “claw back” of OAS benefits could occur as more investment incomes comes outside of TFSAs.
Questions Surrounding the Lifetime Capital Gains Exemption (LCGE)
This year, nobody mentions LCGE in their political campaigns, which has left many unsure what to think. For now, things appear to remain unchanged, though for how long is anybody’s guess. It may be worthwhile for some to claim the LCGE now while still owning your PC, HSC, or practice, or else you put tax savings of more than $200,000 for each LCGE in jeopardy!
Old Age Security (OAS) Changes Scrapped
Previous plans to raise the OAS to 67 are likely going to be abandoned. The age to qualify will revert to 65. This won’t impact many Canadians who were not going to be affected by the proposed change until 2023.
If you would like to learn more about how the new Liberal government could affect your tax strategy, consult your CPA accountant in Calgary today. Call (403)-800-3303 to learn more, or use our online contact form to get in touch with your CPA accountant in Calgary.