TAX CUTS AND HIKES FOR 2016

OTTAWA— The new year always brings some changes to how much Canadians will be paying — or getting back — in taxes, especially when there is a new federal government in town. Tax cuts and tax hikes The federal government is lowering the rate for the second income-tax bracket — affecting Canadians who earn between $45,282 and $90,563 per year — from 22 per cent to 20.5 per cent beginning Jan. 1. The federal government also introduced a new tax bracket for individuals whose taxable personal income exceeds $200,000 per year. Income over that amount will now be taxed at a rate of 33 per cent, up from 29 per cent. Canada Child Benefit Families will have to wait a little longer for the Canada Child Benefit, a monthly tax-free payment the Liberals promised to replace the Universal Child Care Benefit and other measures.

Finance Minister Bill Morneau has said those payments will begin July 1, 2016, with more details expected early in the new year. Tax-Free Savings Account The Liberals introduced legislation to bring the limit on contributions to the Tax-Free Savings Account back down to $5,500 for 2016.

Future increases will be indexed to inflation using the Consumer Price Index, rounded to the nearest $500.

The $10,000 limit the Conservative government brought in remains in effect for 2015. Stamps stay the same Canada Post has agreed to hold things steady pending a government review of its services. So, the price of a single stamp for domestic letter mail weighing 30 grams or less will remain at $1.00, or $0.85 each when bought in a booklet, coil or pane. Parcels, direct mail and large-volume mailings, however, will see “competitive rate changes” early in 2016. Employment Insurance The maximum insurable earnings for EI will increase from $49,500 to $50,800 beginning Jan. 1. This means the maximum weekly EI benefit rate will also rise from $524 to $537 per week. Meanwhile, the premium rate, which is the money that comes off your paycheque, will stay at $1.88 per $100 of insurable earnings. Workers will see their maximum annual premium increase to $955.04, up from $930.60 in 2015. Canada Pension Plan The maximum pensionable earnings under the CPP will be $54,900 in 2016, an increase from $53,600 in 2015, and the basic exemption amount will stay at $3,500.

The contribution rates for both employees and employers will remain at 4.95 per cent, but because of the increase in pensionable earnings the maximum annual contribution will be $2,544.30, up from $2,479.95 in 2015.