The Sleepy Budget

I would be remiss to not write a blog post on the recent federal budget, even though it is not an exciting topic except for a data geek like me.

It was a rather ho hum budget but there are 2 relevant facts to note. First some of the more important announcements came long before the actual budget. For most income earners the 3 most important were:
1. Changes in tax percentages. The most notable is a reduction in the second tax bracket to 20.5% from 22%.
2. Also any income over $200,000 will be taxed 33% instead of 29%.
3. A decrease in the TFSA limit from $10,000 to $5,500, but indexation of the limit was restored. The $10,000 limit was not repealed which was something I was wondering about. So in total the maximum room to contribute to a TFSA in 2016 if you have never contributed is $46,500.

It is also important to note that the Finance Minister has announced post budget that the new government has not completed their review of the tax code. I am sure most financial professionals would like to see a simplification of the tax regime, because that would increase successful compliance which in turn would save taxpayers money in the long run.

So what changes are relevant to most Canadians? The majority of items in the new budget deal with tax credits (remember from a past post that credits reduce tax owing). Families with children under 18 and students will take an interest in these changes.

So what credits got axed? There have been a number of changes on Schedule 1 the page where you record all your credits.

The child tax credit and the the family tax cut have disappeared.
The fitness and arts activities for children 16 and under are cut in half for the 2016 tax year and will disappear in 2017.
The child care expense deduction has been increased by $1000.
The textbook and education credit will be gone starting in 2016. Tuition expenses will still be a credit. The new government has said they will bring in a nonrepayable, nontaxable grant program for low income students but no details have been released.

So that’s it. If you have any questions please let me know. I am sure there will be more announcements as the year progresses, I will keep you posted.