January 14, 2016
The federal Liberal government has followed through on its previously promised changes to federal income tax rates. Effective January 1, 2016, there is a tax cut for individuals in the second-lowest tax bracket and an increase in the tax rate for those earning more than $200,000 of taxable income per year. There has also been a corresponding increase to the tax rate on investment income and Canadian source dividends earned by Canadian-controlled private corporations (“CCPCs”). The resulting proposed amendments to the Income Tax Act (Canada) (the “ITA”) also include a reduction in the Tax Free Savings Account (“TFSA”) annual contribution limit.
Personal Tax Rates
For 2016, the top marginal federal income tax rate increases from 29% to 33% for taxable income over $200,000. The tax rate for taxable income between $45,282 and $90,563 is reduced from 22% to 20.5%. The new 20.5% rate results in a maximum 2016...
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