Several federal tax changes are expected in 2016 based on the
Liberal Government's Tax Platform.
Personal tax rates. The Liberal Party has proposed to
reduce the tax rate for the second lowest tax bracket ($44,700 to
$89,401 of taxable income) from 22% to 20.5%, stating that this can
result in tax relief of up to $670 per person. The Liberal Party
has also proposed a new top federal tax rate of 33% for individuals
with taxable income in excess of $200,000. For 2015, the top
federal tax rate is 29% on taxable income over $138,586. As the new
33% federal tax rate may become effective for 2016, you may
consider reviewing the timing of discretionary bonus and/or
dividend payments, and accelerating such payments to this year.
Please contact your Crowe MacKay tax advisor to discuss such
The Liberal Party Tax Platform also mentions the following items
that the party plans to implement:
Eliminate the education and textbook tax credits and increase
access to student grants
Introduce a refundable tax credit for teachers and early
childhood educators who purchase certain supplies for their
Cancel the increase of the Tax Free Savings Account annual
contribution limit to $10,000
Eliminate the Family Tax Cut tax credit
Replace the Universal Child Care Benefit, the Canada Child Tax
Benefit and the National Child Benefit with a new tax-free Canada
Restore the Old Age Security and Guaranteed Income Supplement
eligibility age to 65 and increase the Guaranteed Income
Increase the Northern Residents Deduction to a maximum of
$8,000 per year and index the amount in subsequent years
Limit the stock option deduction for individuals with more than
$100,000 in annual stock option gains
Child care expenses
Starting in 2015, the maximum annual amounts that can be claimed
for child care expenses will increase by $1,000. The following
annual limits will apply:
Age 6 and under – $8,000
Age 7 to 16 – $5,000
Over 16 infirm dependent children – $5,000
Children eligible for the disability tax credit –
Capital gains exemption
For 2015, the capital gains exemption for qualified small
business corporation shares has risen from $800,000 to $813,600.
This exemption will be indexed for inflation in subsequent years.
Furthermore, the capital gains exemption for qualified farm or
fishing property was raised to $1,000,000 for dispositions
occurring after April 20, 2015.
First-time donor's super credit
The first time donor super credit on up to $1,000 of donations
will be available again in 2015. This increased tax credit adds 25%
to the current credit and only applies to cash donations; donations
in kind are not eligible.
This credit is only available to individuals if neither the
individual nor the individual's spouse has claimed a donation
tax credit in the preceding five tax years.
Home accessibility tax credit
Starting in 2016 a new federal tax credit, the home
accessibility tax credit, will be available for seniors (age 65 and
older) and individuals who qualify for the disability tax credit.
The credit will allow these individuals to claim a tax credit on up
to $10,000 of expenses incurred to perform a "qualifying
renovation" on their home. Such a renovation must allow the
individual to gain access to, or be mobile or function within the
home, or reduce the risk or harm of the individual within or
gaining access to the home.
CRA's on-going efforts to strike a balance between what is
reasonable versus what is required reporting has led to further
changes to Form T1135 Foreign Income Verification Statement. For
2014 and subsequent tax years, taxpayers may only have to report
aggregate amounts (by country) for specified foreign property held
in accounts with registered securities dealers and Canadian trust
companies rather than providing the detail of each such
Specified foreign property continues to include debt and equity
securities of foreign entities, cash held in foreign bank accounts
and foreign rental property. Where the aggregate cost of all
specified foreign property exceeds $100,000 CAD at any time in the
year, all such property is reportable. Although these rules do not
result in any additional tax payable, there are substantial
penalties for failing to make these disclosures when required. It
is best to contact your Crowe MacKay tax advisor now if you are
unsure as to whether these rules apply to you. Planning ahead will
help ensure you obtain the necessary information ahead of the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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