How will the new Federal Government impact your finances?

Mark

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Mark Neufeld

Financial Advisor, Director

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Changes are coming with the new Federal government. Not all the details are known yet, but here is a brief summary of some of the changes that may impact your finances:

  • The income tax rate for individuals with taxable income between $45,282 and $90,563 will decrease effective January 1st, 2016.
  • The income tax rate for individuals with taxable income over $200,000 per year will increase effective January 1, 2016.
  • The annual TFSA limit will drop back to $5,500 from $10,000 effective January 1st, 2016, but the limit for 2015 will remain untouched.  This means, if you have not already taken advantage of the $10,000 TFSA contribution limit for 2015, no need to worry as you can carry forward this room to future years. Please note the new limit will be indexed for inflation and rounded to the nearest $500 increment.
  • The Liberal government campaigned to remove what is called the Family Tax Cut - a non-refundable tax credit of up to $2,000 for eligible couples with minor children. Please note this measure is not to be confused with the pension income splitting rules that have benefited many readers of this blog for several years.
  • A new Canada Child Benefit will start July 1, 2016. This benefit is income tax free, tied to income and replaces a number of measures and payments families with children now receive, including the Universal Child Care Benefit.
  • For those looking to buy a new home, please take note as the Federal government is increasing the minimum down payment requirements. To qualify for Canada Mortgage and Housing Corporation insurance (CMHC), homeowners are currently required to put down a minimum of five per cent.  Starting in February 2016, CMHC will require a 10 per cent down payment on the portion of any mortgage it insures over $500,000. The five per cent rule remains the same for the portion up to $500,000.