Filing taxes is going to be a bit different this year, as certain terms have changed under new Government. I'd like to offer a simplified bullet points of new conditions to help you when crunching numbers this tax season.
- Income Splitting: Stephen Harper’s income splitting is still in for the 2015 tax year, but it should be removed for the next tax season.
- Tax Cut Savings:The cut to the second tax bracket will save Canadians making less than $200,000 up to $679 per person.
- Child Benefits: The Liberals have promised a child benefit program to replace the universal child care benefit starting in July 2016.
- Tax Free Savings Accounts: TFSA's have a limit of $10,000, next year the federal government has reduced the contribution limit to $5,500. NOTE: Don’t sweat it if you didn’t get the money moved last year, the TFSA room accumulates and can be used in later years.
- Reduced Tax Rate: People earning $45,283 to $90,563 will have a reduced tax rate (from 22% to 20.5%)
- Increased Tax Rate: People earning over $200,000 will have an increased federal tax rate (from 29% - 33%). NOTE: If you are going to make over $200,000 this year, think about delaying your RRSP deduction to next year.
- Retirees: The minimum registered retirement income funds, pooled registered pension plan or registered pension plans have been reduced.
New Technology: There is now a mobile app from the Canada Revenue Agency that you can view your notice of assessment, tax return status, benefit and credit information, and RRSP/TFSA on. Check it out here.
Here is a table of the 2015/2016 tax rates:
|$45,282 or less||15%||15%|
|$45,283 to $90,563||22%||20.5%|
|$90,564 to $140,388||26%||26%|
|$140,389 to $200,000||29%||29%|
Tax planning is a year-round exercise. It's a continuous process. You shouldn't just fill out the tax return in April, but look forward and say what can you do differently for next year. If you need a referral a professional tax account, please contact me. They are experts that can save you thousands of dollars each year.
Should you be looking at ways to increase your RSP contributions, or consolidate high interest, non-tax deductible debt, give me a call to discuss. There may be some great options for you with the expertise I can share about smart borrowing.