|Canada Legislates for Middle Income Tax Cuts|
Canada's new Finance Minister has tabled a Notice of Ways and Means Motion to cut the 22 percent income tax rate and introduce a new rate for incomes over CAD200,000 (USD148,028).
Under the current system, tax is paid at 15 percent on the first CAD44,700 of taxable income, 22 percent on the portion between CAD44,701 and CAD89,401, and 26 percent on the portion between CAD89,401 and CAD138,586. Income over CAD138,586 is taxed at 29 percent.
The motion provides for the implementation of key Liberal Party election pledges. If passed, the 22 percent rate will be cut to 20.5 percent, and a new rate of 33 percent will apply to individual taxable income in excess of CAD200,000. In addition, the motion reduces the Tax-Free Savings Account annual contribution limit from CAD10,000 to CAD5,500. The measures are intended to apply from January 1, 2016.
According to the Government, the income tax cuts will save a single individual an average of CAD330 a year, and couples will benefit to the tune of CAD540.
The Government also intends to introduce a single, tax-free Canada Child Benefit as part of next year's Budget. It plans to repeal the income splitting rules introduced by the previous Conservative Government, with effect from the 2016 taxation year.
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Published on our website on Dec.09, 2015