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Canada tax changes in 2017

India Blooms News Service | | 30 Dec 2016, 12:03 pm
Toronto, Dec.30 (IBNS): A number of tax changes would affect federal and provincial governments in 2017 with the Canadian Taxpayers Federation (CTF) claiming that the new rules will mean more money in the pocket of majority of Canadians.

Federal government is ending child tax credits for: arts, fitness, education and textbooks in 2017. But the parents of children under the age of 16 can pre-pay 2017 arts and fitness programs, which can be claimed on 2016 tax returns provided total amount spent in 2016 is not more than $250 and $500 limits respectively, media reports said.

Income splitting for families is also being cancelled by the Federal Government. Previously this option allowed one of the parents, who had a child under the age of 18, to transfer up to $50,000 of income to the spouse with a lower income. The tax credit for income splitting was capped at $2,000.

On the other hand, Canada Child Benefit and changes to Employment Insurance benefits introduced in 2016 would show improvement.

The Canadian Taxpayers Federation (CTF) has released its annual report crunching the numbers on new year’s tax changes for Canadians, and the result will likely mean a tax break for most Canadians in 2017.

The two main federal measures are changes to Employment Insurance (EI) premiums which will result in tax savings of up to $132 for employees and $185 for employers, and the first full year of the means-tested Canada Child Benefit (CCB), which is also tax-free.

“High income earners in most provinces will pay more” said CTF Federal Director Aaron Wudrick. “But for the majority of Canadians, these two changes will mean more money in their pockets.”

As part of its annual New Year’s Tax Changes report, the CTF has calculated the tax impact for families for 2017 for 44 hypothetical Canadian households. Some highlights include:

A two-child, single-income family in Ontario earning $60,000 per year will pay $122 less in taxes and receive an additional $1,824 in CCB payments. (not including the Ontario carbon tax)

A two-child, two-income family in Alberta earning $80,000 per year will pay $153 less in taxes and receive an additional $2,007 in CCB payments (not including the Alberta carbon tax), while the same family in Quebec will pay $233 less in taxes and receive an additional $2,075 in CCB payments.

A B.C. couple with no kids earning $100,000 will see a small tax cut of $25.

Quebecers will see some of the largest tax reductions, with families earning $250,000 paying $1,409 less in tax due to the abolition of the provincial health tax and changes to employment insurance, while a Newfoundland family earning the same would see a tax hike of over $3,000.

Wudrick cautioned that while the news was generally positive on EI and child benefits, looming carbon taxes could claw back those gains.

“Alberta and Ontario are beginning their ill-advised experiment with carbon taxes on January 1st, 2017,” said Wudrick. “And if the Trudeau government has their way, other provinces that don’t currently have a carbon tax won’t be far behind.”

(Reporting by Asha Bajaj)