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Income Tax Changes Announced this December 2015in Canadian Government News and Updates
For 2016 and the tax years after that, the federal personal income tax rate on taxable income of $45,282 to $90,563 which is the second income tax bracket will be reduced by 1.5% from 22% to 20.5%. Please note that the income tax bracket amounts will continue to be indexed annually.
For high-income earners, a new federal personal income tax bracket and rate for 2016 and subsequent tax years has been proposed. Taxable income over $200,000 will be subject to a federal income tax rate of 33%. This income tax threshold amount will also be indexed annually for years after 2016.
Once these proposed changes are approved by Parliament, these changes to the federal personal income tax rates will be found on Schedule 1, Federal Tax of the T1 income tax and benefit return package for 2016 tax year which will be available on the CRA website by January 2017.
This recent announcement also included the proposed change to the TFSA annual contribution limit. For 2016, the proposed TFSA annual contribution limit will be $5,500. For subsequent tax years, the TFSA annual contribution will be indexed to inflation and rounded to the nearest $500. Please note that the $10,000 TFSA annual contribution will remain the same for 2015.