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Important Tax Changes for 2016

Here's a summary of changes you should be aware of to help you in planning your personal tax return for 2016. 

You can also find useful  information and ideas on creating a more effective tax plan in this section

If you require assistance in developing or managing your tax plan — including implementing a sound tax-minimization strategy — contact us today or send us an email. We would be pleased to help!
 
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+ RRSP Limit Rises to $25,370 for 2016


In the 2006 federal budget, the government increased the retirement savings limits including a formula to index the limits each year. The limits and other increases are summarized in the chart below:

 
  2014 2015 2016

RRSPs - Annual contribution limits

Current

$24,270

$24,930

$25,370

Money purchase RPPs - Annual contribution limits

Current

$24,930

$25,370

$26,010

Defined benefit RPPs - Annual pension benefit per year

Current

$2,770

$2,819

$2,890

















*Indexed to the growth in the average industrial wage
 

+ Payments due by December 30, 2016

 
  • Alimony payments
  • Charitable donations
  • Child-care expenses
  • Interest expenses on money borrowed to earn investment income
  • Medical expenses
  • Union and professional membership dues
  • Investment counsel fees, interest and other investment expenses
  • Political contributions
  • Deductible legal fees
  • Interest on student loans
  • Payments eligible for the fitness tax credit
  • Loan interest
  • Safety deposit box fees
  • Tax-shelter payments
  • Professional fees
  • Interest on family loans (generally at the prescribed rate) must be paid paid within 30 days of the end of each calendar year to avoid income attribution. Consider new arrangements while the prescribed rate is low – currently 1%
  • Review family trusts for any action that's required by December 30, 2016.

+ Personal Tax Credits


Non-refundable tax credits can only be used to reduce federal or provincial/territorial taxes payable to zero. They cannot be carried forward to future years. However, unclaimed donations can be carried forward for up to five years, and sometimes unclaimed medical expenses can be claimed in the next year, depending on the timing. Unclaimed tuition, education and textbook amounts can either be transferred to someone else or carried forward.

The chart below summarizes the minimum proposed levels of these amounts, ignoring any additional inflation increases:
 

Proposed personal, spousal and threshold
amounts (ignoring inflation)

  2015 2016
Basic personal amount

$11,327

$11,474

Spouse or CLP amount

$11,327

$11,474

Net income threshold

$35,466

$35,927

 

 
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