Changes to Canada’s tax code take effect tomorrow.
The federal government announced that several changes, including adjustments to the basic personal amount, the home buyers’ plan and changes announced as part of the $600-million set aside to support journalism in Canada, will take effect starting on Jan. 1.
One of the biggest changes is the previously-announced increase to the basic personal amount.
That’s the base amount set as tax-free before income tax starts taking effect. It’s been proposed to be increased to $13,299 as the first step in a proposal to increase the amount to $15,000 by 2023.
The other biggest change was announced in the 2019 budget and has to do with the Home Buyers’ Plan, a federal program that intents to help first-time homebuyers save for a down payment by allowing them to withdraw up to $35,000 from a registered retirement savings plan (RRSP) to purchase or build a home without having to pay taxes on that withdrawal.
Beginning in 2020, people who experience a breakdown of a marriage or common-law partnership in the year of making a withdrawal or in any of the four preceding calendar years will also be able to access the play even if they’re not first-time home buyers.
More information about that program is available on the Canada Revenue Agency website.
Two other changes to retirement savings will also take effect tomorrow. Both are new types of annuities allowed under registered plans.
Purchases of advanced life deferred annuities will be permitted from an RRSP, retirement income fund, deferred profit-sharing plan, pooled pension plan and defined contribution pension plan. Variable payment life annuities will also be permitted under the pooled and defined contribution pension plans.
The other change for individuals is the introduction of the personal income tax credit for digital subscriptions to Canadian news outlets.
Individuals will be allowed to claim up to $500 in costs paid towards eligible digital subscriptions in a taxation year for a maximum credit of $75 annually.
The credit will be available in respect of amounts paid after 2019 and before 2025.
The other changes apply to corporations and include allowing journalism organizations operating as not-for-profits to register under a new category of tax exemption, proposals to prohibit contributions to a specified multi-employer plan once a member hits 71 years old, a change in foreign affiliates reporting requirements and tools designed to reduce tax avoidance by multinational companies.
More information on all of the measures is available from the Canada Revenue Agency.
