Anticipated tax changes with the new Liberal Government
Knowing the results of our most recent federal election, we should take a look at what our new government might have in store for taxpayers. During the election, the Liberal party platform had several initiatives and promises that affected taxpayers. Specifically, they promised to:
- Reduce the TFSA annual contribution limit from $10,000 to $5,500;
- Increase the federal tax rate by 4% for individuals with taxable income over $200,000;
- Effect a 1.5% decrease in the federal tax rate for individuals with taxable income between $44,701 and $89,401, the middle class tax cut;
- Eliminate the family tax cut as introduced in 2014;
- Replace the Universal Child Care Benefit which was introduced in 2015 with a new income tested Child Tax Credit;
- Cap the stock option deduction;
- Decrease the federal tax rate for small business by 2%.
The timing of these changes is not known. However, individuals may want to do some planning in 2015 if they anticipate the changes will be made in 2016.
- Contribute the maximum amount possible to your TFSA to ensure the 2015 maximum of $10,000 is not lost by future changes.
- Exercise stock options in 2015 if you feel the new cap will apply to you.
- Pay bonuses earlier than normal so that they fall within the employee or manager’s 2015 tax year.
- Pay discretionary dividends early so that they fall within the shareholder’s 2015 tax year.
- Maximize discretionary deductions for your small business so as to defer active business income to next year.
Richardson GMP's Tax & Estate Planning team will keep abreast of any changes as they are introduced in the coming months.
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