Tax Changes for Personal Tax

By March 10, 2018Accounting
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The new financial year is almost here, and a new budget along with tax changes for businesses and individuals has already been introduced. In order to begin with your tax preparation for the new financial year, you must be aware of the changes in personal taxes made by the Minister of Finance and the Canada Revenue Agency (CRA).

Bill Morneau, the Minister of Finance, announced a new budget on February 27, 2018 (Budget 2018). The budget had some tax changes for businesses owners and individuals. To know what are the changes in personal taxes, let us first take a look at the existing personal tax. Here are the Federal Personal Income Tax Brackets and Tax Rates for the financial year 2017-2018.

  • 15% on the first $45,916 of taxable income, +
  • 20.5% on the next $45,915 of taxable income (on the portion of taxable income over $45,916 up to $91,831), +
  • 26% on the next $50,522 of taxable income (on the portion of taxable income over $91,831 up to $142,353), +
  • 29% on the next $60,447 of taxable income (on the portion of taxable income over $142,353 up to $202,800), +
  • 33% of taxable income over $202,800.

According to the new budget, the federal tax rates are unchanged, but the brackets have been changed by an indexation factor of 1.015. The indexation factors, tax brackets, and tax rates have been confirmed by the Canada Revenue Agency (CRA). The new federal tax rates for 2018-2019 are as follows:

  • 15% on the first $46,605 of taxable income, +
  • 20.5% on the next $46,603 of taxable income (on the portion of taxable income over 46,605 up to $93,208), +
  • 26% on the next $51,281 of taxable income (on the portion of taxable income over $93,208 up to $144,489), +
  • 29% on the next $61,353 of taxable income (on the portion of taxable income over 144,489 up to $205,842), +
  • 33% of taxable income over $205,842.

Your federal tax rate is based on your income. The federal tax is the portion of your taxable income before any credits and benefits. Apart from paying the taxable amount to the Canada Revenue Agency, a specified percentage has to be paid to your province too. This additional amount is known as the provincial income tax.

Here are the provincial taxes for Alberta for the financial year 2017-18.

  • 10% on the income up to $126,625, +
  • 12% on income between $126,625.01 and $151,950, +
  • 13% on income between $151,950.01 and $202,600, +
  • 14% on income between $202,600.01 and $303,900, +
  • 15% on income over $303,900.01

 According to the changes suggested, the provincial tax brackets and tax rates for the province of Alberta look as follows:

  • 10% on the first $128,145 of taxable income, +
  • 12% on the next $25,628, +
  • 13% on the next $51,258, +
  • 14% on the next $102,516, +
  • 15% on the amount over $307,547

Some Additional Information Regarding New Tax Changes and Payments:

  1. Self-employed individuals have until June 15, 2018, to file their return.
  2. From February 26 to April 30, 2018, the CRA will be offering extended evening and weekend hours for Individual Tax Enquiries. The lines will be open from Monday to Friday (except holidays) from 9:00 am to 9:00 pm (local time) weekdays, and from 9:00 am to 5:00 pm (local time) on Saturdays.

Source: https://www.canada.ca

In order to ease the process of filing your personal tax returns, you can hire an accounting firm. Get in touch with us, and we will help you gain the right tax benefits and ensure you file the correct tax amount.