Some changes to Canadian taxes have been made since the Liberal government was elected into power last year. If you haven’t already filed for 2015, take a look at these new changes that could affect you.
Family tax Cut
The income-splitting benefit introduced by the former Conservative government in 2014 is being scrapped, but some families can still benefit from the tax cut in their returns this year. With this benefit, families with children under 18 can transfer up to $50,000 of income from the higher-earning partner to the lower-earning partner, for a tax credit of up to $2,000.
Universal Child Care Benefit
The Universal Child Care Benefit, which was introduced in 2015, is also on its way out. The Liberal government is instead planning to introduce a new, tax-free Canada child tax benefit. Families will have to account for the UCCB when they file their tax returns this year and may see a smaller refund.
The maximum claimable amount for childcare has increased by $1,000 annually per child to $8,000 for kids under 6 years old, $5,000 for kids ages 6 to 16, and $11,000 for a child with a disability. Only the lower-income earning spouse can claim this deduction.
New tax brackets
Beginning this year, the federal marginal tax rate on those earning between $45,283 to $90,563 will drop from 22% to 20.5%. Those earning more than $200,000 will see their tax rate increase from 29% to 33%.
Tax-Free Saving Accounts
The amount Canadians can contribute to their TFSAs has been reduced to $5,500 after being raised to $10,000 last year.