Federal government budgets over the years have had some key common traits: loss of brevity, increasing amounts of details for the public (despite all the focus on openness hardly anyone aside from industry experts reads the budget, and a more voluminous version conversely makes the budget even more daunting to tackle). With the 270 page volume budget released, here is the recap of the salient tax topics addressed
Alternative minimum tax rate per budget proposal will increase from 15% to 20.5%, while the minimum threshold under which AMT applies will increase from $40,000 to $173,000. Alternative minimum tax was introduced by the federal government to ensure wealthy individuals who could use specific tax credits and deductions to limit tax on their applicable income, were made to pay a minimum effective tax rate on their yearly income regardless. The increase in the AMT rate and the increase in threshold will mean wealthier Canadians with access to tax preferences that can reduce their tax liabilities for the year, will have to pay more taxes.
The background of the GAAR Law and its applicability was explained earlier in this article. GAAR is a very wide and pervasive law, and practically most transactions that are not done for a commercial purpose, but rather with a tax reduction goal in mind, come under its tentacles. Courts have time and again sided with CRA in most GAAR cases. The Budget proposes to start process of consulting and further fireproofing GAAR. This will make it very difficult to utilize creative tax schemes, details to follow.
RESP Withdrawal Increase is good news!
Good news for students ! Maximum RESP withdrawal yearly limits are being increased to $8K for full time students and $4K for part time students in specific situations. This will make post-secondary education with its escalating tuition and associated costs more affordable for the average Canadian.