On Tuesday March 22, 2016 the Liberal Government announced their federal budget 2016. There are changes for individuals and businesses that you should be aware of. We have included for your information a commentary on the budget and how it might affect you going forward.
The top 5 things you need to know (details for these and other proposed changes are inside our commentary document on the federal budget):
1. Small Business Deduction Rate – The 2016 Budget proposes that the Federal small business tax rate remain at 10.5% after 2016. (It was previously schedule to decrease by .5% annually through to 2019).
2. Canada Child Benefit – The Canada Child Benefit will replace the Canada Child Tax Benefit and Universal Child Tax Benefit as of the beginning of July 2016. Payments remain as proposed in the Liberal Platform ($6,400 per child under the age of 6 and $5,400 per child aged 6 through 17), however, the phase-out rates for families with net income above $30,000 has increased.
3. Education and Textbook Credits for students – The budget proposes to eliminate the education and textbook credits after 2016. The tuition tax credit will remain available.
4. Children’s Fitness and Arts Credits – These credits are proposed to be phased out by 2017. In 2016 the eligible amount for the Fitness credit is reduced to $500 (but remains refundable) from $1000 and the Arts Credit is reduced to $250 from $500. Both these credits will be eliminated in 2017.
5. Capital Gains Inclusion Rate – The rate will remain at 50% and has not increased as speculated by many media sources.