Unknown realities that the new tax changes will bring forth in Ontario
There were plenty of changes courtesy of the Trudeau government that were to be put into effect in 2016/2017. On 7th December, Ontario updated the new tax changes which were officially released by Bill Morneau, the Finance Minister. On that day the official release of Notice of Ways and Means Motion (NWMM) was done. Consequently, a number of promises which were made during the tax campaign began to be implemented. All the critical considerations made were to be updated to the former tax rates and policies.
Changes In personal tax rates
The personal tax rate will drop down from 22% to 20.5% effective at the time of implementation of the new tax return policies to the subsequent taxation years. The new tax rate will benefit those who earn an income of between $45,282 and $90,563. Those whose income is in the high margin range (over $200,000) will have a tax rate increase from 29% to 33%. That will comprise of the highest individual group.
Proposed changes for donation credit changes
There is a new complex formula for computation of these donation credit tax rates rather than a direct increase from 29% to 33%. It will affect those whose individual taxable income exceeds $200,000. Those under this category will receive a 33 percent credit rate.
It is important to note however that the 33 percent credit rates will only be available only for donations which had been made after 2015. Any donations which have been carried forward from the previous years will have a credit rate of utmost 29%.
Refundable tax on investment income refunds
Previously, in cases where a Canadian living in Ontario earning profit a refundable tax of 6 2/3 of the average investment income or taxable income was payable by CCPC(Canadian-controlled private corporation). However, with the new amendments, the rate will increase to 10 2/3%. That has been done to reduce the personal tax deferral chances that individual earnings might otherwise be obtained through CCPC.
With a higher refundable rate and higher part IV tax, there is to be a similar rise in dividend refund rate. The new rates will drop from 38 1/3% from 33 1/3%. Other amendments to the related provision, including information on all dividend tax will reflect the full impact of these changes.
Stock option deduction
According to the new tax alerts, there are to be significant changes in taxation of stock options. However, the changes have not been officially released. That is because it is under review and will be released once the submission is made by the parties which are working on the impact of possible changes.
Dividend tax credit
There are no proposals that are to be effected by changes in gross up for both eligible or illegible dividends.
To fully comprehend the impacts of implementation of new tax rates on businesses and family, it is paramount to consider the modifications that have already been made to the current tax season in Ontario. Additionally, you will have adequate time to file your tax returns according to the upcoming filing changes before RRSP deadline/contribution, which is on March 1, 2017.