With the tax filing deadline right around the corner, now that the dust has settled, we thought it would be the perfect time to look at the tax changes on the way. Low and middle-income families are the real winners from this year’s budget. Those with children will see a bump up thanks to the Canada Child Benefit. Meanwhile, the controversial Family Tax Credit, which let families income split, is being repealed. Let’s take a look at those and other tax changes on the way.
Low and Middle-Income Families Get a Boost from the Canada Child Benefit
The newly-elected Liberals are introducing the Canada Child Benefit to replace the Universal Child Care Benefit (UCCB) and the Canada Child Tax Benefit (CCTB). The Canada Child Benefit is means-tested, so the amount you receive depends on how much you make. Under the existing system, a low-income family making $30,000 would receive $4,852 for each child under six and $3,916 for each child between the ages of six and 17. With the Canada Child Benefit, those same families will see $6,400 for children under six and $5,400 for children between the ages of six and 17. Families can expect to save on average $2,300 on their tax bill.
A Tax Break for the Middle Class
The Liberals are delivering on their promise to give the middle class a tax break. The tax bracket for those with taxable income between $45,282 and $90,563 is being trimmed from 22 percent to 20.5 percent. Single taxpayers in this tax bracket can expect to save $330 on their tax bill, while couples will save on average $540. To pay for this tax break, the Grits are raising the tax bracket for the 1%. There will be a new tax bracket of 33 percent for those with taxable income over $200,000.
Child Disability Benefits
If you have a disabled child, you can expect a tax break from the government. The Child Disability Benefit is being increased by $2,730 per child who qualifies for the Disability Tax Credit.
Cutting the Children’s Fitness and Arts Tax Credits
Finally, the Children’s Fitness and Arts Tax Credits are being gradually reduced. Families will only be able to claim 50 percent of maximum eligible expenses in 2016, before the tax credits are completely phased out in 2017.
Family Tax Credit Repealed
The Liberals have cut the Family Tax Credit. The Family Tax Credit previously allowed families with children age 17 or under to split income and save up to $2,000 on their tax bill.
These are just a few of the biggest tax changes in the federal budget. Are you confused about the budget? Do you need help figuring out how this affects your family’s pocketbooks? Feel free to contact our office to find out.