Ottawa, ON – Yesterday, as promised, the Government of Canada took an important step to strengthen the middle class by proposing a tax cut that will benefit about 9 million Canadians each year.
Finance Minister Bill Morneau tabled in the House of Commons a motion to reduce the 22-per-cent personal income tax rate to 20.5 per cent. This will result in a savings of $330 per year for single individuals and $540 per year for couples that qualify.
“We ran on a platform designed to help Canadians and I am proud that the Government is moving quickly to put that platform into action. Our Government is committed to investing in the economy, growing the middle class, and providing help to those who need it most,”said Sheehan.
To help pay for this middle class tax cut, the Government is asking the wealthiest one per cent of Canadians to pay a little more. The motion includes provisions to create a new top personal income tax rate of 33 per cent for individuals earning taxable incomes of more than $200,000. The motion also contains provisions to return the Tax-Free Savings Account annual contribution limit to $5,500 from $10,000.
All of today’s proposed tax changes would take effect on January 1, 2016 and for subsequent taxation years.
Going forward, the Government will introduce proposals in the budget to create a new Canada Child Benefit—one simpler, tax-free, and more generous benefit targeted to families who need it most. Payments under the new Canada Child Benefit would begin in July 2016. The Government also intends to introduce legislative amendments, at an early opportunity, to repeal income splitting for families with children (not pension income splitting) for the 2016 and subsequent taxation years.