AUTHOR: Trevor Smithers, CPA, CMA

Last month Federal Finance Minister Bill Morneau issued a Notice of Ways and Means Motion that implemented a number of tax changes which were promised in the Liberal partyplatform:

  • Effective January 1, 2016, the federal personal tax rate on income between $45,283 and $90,563 will decrease from 22 per cent to 20.5 per cent and the tax rate for income over $200,000 will increase from 29 per cent to 33 per cent Charitable Donations made after 2015 that exceed $200 will be eligible for a tax credit rate of 33% to the extent the individual has income that is subject to the new 33% personal income tax rate
  • The 2016 Tax Free Savings Account contribution limit will drop back to $5,500 effective January 1, 2016 and will be indexed thereafter Canadian-controlled private corporation (CCPC) investment income surtax will be increasing from 6 2/3% to 10 2/3%, raising the overall tax on investment earned in a CCPC by 4 percentage points, for taxation years ending after December 31, 2015 (pro-rated for taxation years straddling this date)
  • Part IV tax rate for corporations will be increasing from 33 1/3% to 38 1/3%, for dividends received after 2015
  • The dividend refund rate on taxable dividends paid by a corporation will be increasing from 33 1/3% to 38 1/3%, for taxation years ending after December 31, 2015 (pro-rated for taxation years straddling this date)

For more information on how these changes impact you or your business, please contact your McCay Duff advisor