One of the biggest interest points revolving around the last election was the tax implications concerning any party that was going to be elected. Well we know the Liberals are in power now so where does that leave everyone? The answer depends on what you are making, and what class you come under. If you are middle class then you are going to be most pleased with your tax future provided the government follows through on its promises.
The indicators are that the tax will be reduced from 22% to 20.5% for those classed as middle income. This is the annual income between $44,701 and $89,401. What is even better is there are some rumblings that this might end up being retroactive to start of 2015, but most tax payers aren’t holding their breath on this one.
Whenever there is good news like a tax cut it comes at a cost. This time it seems like it is going to be on the back of those who are considered high income earners. Those are those lucky ones that are pulling in $200,000. annually. They are going to get dinged with a new tax bracket of 33%. So what is this going to do for the government coffers? Estimates indicate that it should bring in $3.4 billion between the years 2016/2017. There is of course speculation that these high earners are going to become a lot more innovative with their tax planning in order to offset these increased taxes.
The CRA is well aware of this and the Liberal government is going to make sure they are well prepared for it. They have said they will make sure there is an increase in enforcement resources for the CRA to use. Gosh, when you look at it that way the new Liberal government may be creating jobs without even putting a full effort into it as yet. Of course there are not that many positions within the CRA that would allow many to qualify for.
What many are not happy about is the new income splitting venue that the Harper government brought in and most probably will get the axe with the Trudeau government.
What could be tax shattering is the end to the universal child care benefit. This one is causing quite a stir, but it didn’t seem to hold back the votes. The good part of the proposed changes is that it will be tax free but tax tested.
So while the election was an exciting one, it seems the air is still full of anticipation as we all wait to see the talk of the Liberal government put into action.