The recent change in Canada’s federal government has business owners and high-income earners scrambling to contact tax planning accountants in Calgary. A number of serious changes have been set in motion, and they could either cost you or save you money depending on where you rank in Canada’s economic picture.
So what kind of changes can you expect, and when? Learn all you need to know from your friendly neighbourhood tax planning accountants in Calgary.
Tax breaks for the middle class
One of the major talking points on the Liberal campaign trail was to lower taxes for the middle class. The Liberal government stated that their first priority was to drop tax rates for the middle class from 22 per cent to 20.5. This benefits Canadians whose taxable annual income falls between $44,701 and $89,401.
Tax planning accountants in Calgary are speculating that these changes could be implemented retroactively to the beginning of 2015. A more likely option is that they will take effect January 1st, 2016.
Canada’s wealthiest foot the bill
In order to cover the losses that the nation will incur from this middle-class tax cut, the Liberals have declared that they will create a new tax bracket for the wealthy. This will tax those making more than $200,000 per year 33 per cent of their income. This is a considerable step up from the current system, which charges those making over $138,586 per year only 29 per cent of their income.
For Canada’s high-income earners, this news isn’t great. When we factor in the combined federal and provincial marginal tax rate, it exceeds 50% in over half of the provinces.
The Liberal government has very high hopes about the potential return that this system can generate. Trudeau’s financial advisors are projecting that this new tax bracket will bring in roughly $3.4 billion by late 2016. This estimate was tempered by the understanding that many high earners will turn to tax planning accountants for strategies to avoid higher taxes, though Trudeau promised to increase enforcement resources to combat this.
The end of income splitting
Though some Canadians relied heavily on the up-to-$2,000 benefit that the Family Tax Cut granted them, Trudeau has stated that income splitting is largely ineffective. Due to restrictions for single parents, couples with similar incomes, and those with children over 18, income splitting only benefited about 15 per cent of Canadian household. Trudeau believes that eliminating this process could save the federal government up to $2-billion annually.
Harper’s Universal Child Care Benefit is replaced
The Liberals have replaced Harper’s old tax structure with the new “Canada Child Benefit.” This change replaces the monthly, taxable cheques delivered for every child in the house with a new benefit that is both tax-free and income-tested. Trudeau has declared that this is a priority, and tax planning accountants in Calgary anticipate these changes within the next few months.
How do these changes affect you?
To understand how the Liberal tax reform will impact your family and livelihood, contact a tax planning accountant in Calgary today! Visit http://edisonwencpa.ca/contact-us/ and use our online contact form for a fast, informed response to any inquiries you may have.