The federal government is currently working on large-scale tax cuts that should make impact on Canadian’s first pay stubs in the new year.
What are the amendments to the Income Tax Act
We’re here to help you understand exactly what these changes are and how it impacts you.
Tax cuts for the middle class.
The Finance Minister introduced a motion to raise the basic personal amount
the spouse or common-law partner amount, and the amount for an eligible dependant.
This would gradually raise the threshold of income exempt from federal income tax to $15,000 for single taxpayers and $30,000 for those with a dependant spouse or eligible dependant by 2023.
Here’s a look of how the rollout will look like: Year Existing Basic Personal Amount Proposed Basic Personal Amount 2020 $12,298 $13,229 2021 $12,554 $13,808 2022 $12,783 $14,398 2023 $13,038 $15,000 No big change for the high class.
Canada’s one per cent isn’t going to see this change, as the government has proposed to exclude top earners from benefiting from the raised threshold, meaning, the increase is only happening in the lower tier tax brackets.
The increase in the basic personal amount would be phased out for individuals with net incomes above $150,473 in 2020, and eliminated for taxpayers earning $214,368 or more.
Those in the higher tax brackets will only continue to receive their existing amount, tabulated against inflation.
The low down on how much you’ll actually save.
So, what does this translate to in tax savings.
The government projects that 20 million Canadians’ taxes will be cut as a result
once it is fully phased in, saving single Canadians $300 in tax a year, and saving families an estimated $600.
What does this mean for you if these proposed changes come to fruition.
If you have any questions, visit an H&R Block office near you to learn more.
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