Tax Changes from the new Federal Liberal Government

Posted on Dec 10, 2015

On December 7, 2015, the new Federal Liberal government announced the implementation of three personal tax proposals from its election platform.   Below is a summary of these tax changes.  Please call our office if you have any questions.  We would be happy to arrange a meeting to discuss how these measures may apply to your situation, assist you with the preparation and filing of your tax returns, and discuss tax planning opportunities.

Personal income tax rates

Beginning in 2016 the tax rate in the second federal income tax bracket will be reduced from 22.0% to 20.5%.  In addition, a new tax bracket on income in excess of $200,000 will be created with a tax rate of 33.0%.  All of the federal income tax brackets will continue to be indexed to inflation.

The resulting combined federal and Saskatchewan tax rates will be as follows

Income up to $44,601      26.0%
$44,602 to $45,282          28.0%
$45,283 to $90,563          33.5%
$90,564 to $127,430        39.0%
$127,431 to $140,388       41.0%
$140,389 to $200,000    44.0%
over $201,000                   48.0%

Tax-free savings account

The annual contribution limit for calendar 2016 will be reduced to $5,500, subject to annual indexation for inflation.  The contribution limit for 2015 will remain at $10,000.  On January 1, 2016, the cumulative contribution limit since the inception of the tax-free savings account for an individual who was age 18 or older on January 1, 2009, will be $46,500, if that individual has never made a contribution to their tax-free savings account.