Library & Resources

Financial Advisory Services

Summary: 2016 Main Tax Measures

For the 2016 fiscal year, taxpayers from all income brackets should expect changes in their tax returns. We have summarized the most important changes related to the 2016 Tax Measures, just so you understand better the impacts of them for you.

Tax Rates and Brackets for Personal Income Tax

The “Middle Class Tax Cut” is a measure created to reduce the tax rates on the middle class tax brackets, which refers to individuals earning between $45,282 to $90,563. For them, the government have dropped the rates by 1.50%.

To account for the reduction on the middle class brackets, the government increased the rates to 2.44% for the high-income individuals, those making between $200,000 to $220,000, and created a new tax bracket for individuals earning more than $220,000 a year, which are now taxed at 53.53%.

Tuition and Education Credits

As of January 2017, taxpayers will no longer be able to take advantage of the Federal Textbook and Education credits, and starting in September, the provincial portion of the benefit will also be eliminated. Amounts carried forward will still be available for taxpayers until complete utilization, and the federal tuition tax benefit will continue to exist.

Despite this measure, the Government of Ontario is planning to offer more assistance in regards to the cost of post-secondary education in the province. Starting in 2017, students with household income less than $50,000 will be eligible to receive a financial support to cover their education fees.

Canada Child Care Benefit & Child Care Expenses

The Child Care benefit was restructured to provide support to families according to their income and household size. The payments from this benefit will happen monthly and do not have to be entered on the tax return as income. Although the changes in the benefit structure, families with an income lower than $65,000 will not see any significant changes in the program. For the ones with higher income, they may see a reduction in the benefit amount.

As for Child Care expenses, including daycare and nanny services, government has increased the allowable costs by $1,000/child, which means families can now claim up to $8,000 for children under the age of 6, and up to $5,000 for the ones between 7 and 16 years old.

Benefits for Seniors

There was an increase in the GIS (Guaranteed Income Supplement) benefit for low income seniors. The government plans to index both the GIS and the Old Age Security benefits against the cost of living, which will provide higher amounts for the Seniors.

Eliminated Benefits:

  • Family Tax Cut: Before 2016, the highest earner of a family was able to transfer income to their spouse or common-law partner, receiving a credit of up to $2,000. In 2016, this income-splitting measure was eliminated.
  • Children’s Fitness and Art Tax Credits: In 2016, the government is phasing out the tax benefits related to fees paid in programs of cultural, artistic, recreational and/or developmental activity.

 

Do you want to know how these tax measure will affect your 2016 Income Tax Return? Contact your local BGD advisor at 905-676-6000 or visit www.bgdgroup.com for more information.