Canada proposes zero tax on income up to $15,000
Ottawa: The Government of Canada is modernizing the Home Buyers’ Plan (HBP), which helps first-time home buyers save for a down payment by allowing them to withdraw up to $35,000 from a registered retirement savings plan to purchase or build a home without having to pay tax on the withdrawal.
For Canadians who have experienced a breakdown in their marriage or common-low partnership, however, it can be difficult to keep the family home under new and more challenging financial circumstances. Beginning in 2020, people who experience this challenging life event will be able to access the HBP, helping them to maintain homeownership, even if they do not meet the first-time home buyer requirement, said a government media release.
The Government also recently announced its intention to extend—by one year—the maturation period of amateur athlete trusts that were scheduled to mature in 2019, so that they would now mature in 2020. In addition, the government provided an update on proposed changes to the tax treatment of employee stock options, originally set to take effect on January 1, 2020.
Income Tax
The Government of Canada has proposed to raise the Basic Personal Amount (BPA), which is the amount of money Canadians can earn before they have to pay federal income tax.
The increase is coming into effect on January 1, 2020 is the first step in the Government’s proposal to increase the BPA to $15,000 by 2023.
Once fully phased in, the increased BPA would mean lower taxes for close to 20 million Canadians, said the press release. Single individuals would save close to $300 in taxes every year, and families, including those led by a single parent, would save nearly $600 every year. It would put $3 billion into the pockets of Canadian households in 2020, with this amount rising to $6 billion by 2023.
To ensure that this tax relief goes to the people who need help most, the government would phase out the benefits of the increased BPA for wealthy individuals, it added.
“We know that when we invest in people – when we give them the help they need to build a better life for themselves and their families – everyone benefits. Our plan to increase the Basic Personal Amount would mean even more money in the pockets of Canadians to help make life more affordable and keep our economy growing,” said Bill Morneau, Minister of Finance.
“With our proposal to increase the Basic Personal Amount, we are beginning our new mandate by making life more affordable for Canadians so they can focus more on opportunities for themselves and their families, and less on simply making ends meet. Making it easier for Canadians to get ahead is what our plan for middle class prosperity is all about,” said Mona Fortier, Minister of Middle Class Prosperity and Associate Minister of Finance.
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