“WHAT ABOUT LOWER-INCOME GROUPS? YOU WOULD THINK THEY’D NEED THE TAX BREAKS MORE THAN ANYONE.”
Topping up the GIS The Guaranteed Income Supplement provides additional benefits over and above Old Age Security to lowincome seniors. In their first budget, the Liberals fulfilled a campaign promise to increase the top-up benefit to single seniors by a maximum of $947 a year. It’s an overdue move for people near the poverty line.
Increased support for people living apart Older people who have to live apart for reasons beyond their control (for example, long-term health care) were being penalized by a tax system that treated them as being in the same household. The government has increased the benefit for people in this situation to compensate for the increased costs they face.
Income splitting left intact for seniors The Liberals vowed to cut income splitting for most Canadians, and that’s exactly what they did in their first budget. But they left it intact for pension income, which has been a huge benefit for many families. That was a big plus.
Lower tax bracket One of the first measures the Liberals enacted on taking office was to reduce the tax rate for middleincome Canadians, one of the prime minister’s key pledges. For this year, that bracket now covers people with income between $45,282 and $90,563, although everyone earning less than $200,000 (the government’s new tax bracket for highincome earnings) will feel some benefit. One question: what about lower-income groups? You would think they’d need the tax breaks more than anyone. I guess they don’t have the voting clout.
THE NEGATIVE
Government grabs more of your RRSP Not many people noticed it, but the introduction of the 33 per cent tax bracket on income more than $200,000 will have an impact on a lot of RRSPs/RRIFs. If you die with no surviving spouse, your RRSP/RRIF is deemed to be cashed in at fair market value, and your estate is taxed accordingly. The new tax bracket increases the federal levy on amounts over $200,000 by four per cent, presenting a new challenge to estate planners.
TFSA rollback After age 71, TaxFree Savings Accounts are the primary tax shelters available to mature Canadians. That’s why many people cheered when the Harper government raised the contribution limit on the plans to $10,000 in the 2015 budget. Unfortunately, the increase lasted only a year. Within weeks of taking office, the Liberals rolled it back to $5,500 annually, effective in 2016. If you didn’t take advantage of the $10,000 limit last year, you can still do so, however. Any unused contribution room is carried forward to subsequent years, so it’s still available.