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The Basic Personal Amount spawned The New Basic Personal Amount – Part 2.

Posted by David Gobeil on

On December 9, 2019, the Department of Finance released a Notice of Ways and Means Motion to amend the Income Tax Act and related Regulations. As of February 8, 2020, these changes have not received Royal Assent, but they are expected to become law effective for 2020. As a continuation from Part 1: The Maximum New Basic Personal Amount is for the 2020 taxation year, $13,229; for the 2021 taxation year, $13,808; for the 2022 taxation year, $14,398; and for the 2023 and subsequent taxation years, $15,000. The amount of $15,000 is indexed for inflation for the 2024 and subsequent...

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Emilio files his tax return

Posted by David Gobeil on

Emilio files his tax return

For 2020, Emilio is self-employed, and he expects that his business income will be $82,000. His marginal tax rate (MTR) is 38%. The federal conversion rate for the CPP contribution tax credit was 15%. He lived in a province with a conversion rate for the CPP contribution tax credit of 9.8%.  Emilio will have to pay base CPP contributions of $5,464.80, calculated as:  (((the lesser of (contributory earnings and YMPE)) - YBE) × employee and employer’s contribution rates for base CPP); or (((the lesser of ($82,000 and $58,700)) - $3,500) × (95% + 4.95%)).  Emilio will have to pay first additional...

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With 2 Canada Pension Plans, tax relief for contributions is more interesting

Posted by David Gobeil on

With 2 Canada Pension Plans, tax relief for contributions is more interesting

The base CPP pension is the original CPP retirement pension introduced in 1965 that provides a retirement benefit of 25% of your average monthly pensionable earnings. The First Additional Pension is an enhancement to the Base CPP pension introduced in 2019 that increases your retirement pension by 8.33% of your average monthly pensionable earnings. As an employee, your contributions to the base portion of the CPP result in non-refundable federal and provincial tax credits but your contributions to the enhanced portion of the CPP will be deductible for income tax purposes. This sort of partially corrects a penalty or anyone who's taxable...

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The Basic Personal Amount spawned The New Basic Personal Amount – Part 1.

Posted by David Gobeil on

The Basic Personal Amount spawned The New Basic Personal Amount – Part 1.

On December 9, 2019, the Department of Finance released a Notice of Ways and Means Motion to amend the Income Tax Act and related Regulations. As of February 8, 2020, these changes have not received Royal Assent, but they are expected to become law effective for 2020.  The frightening thing is the considerable increase in the complexity of the Income Tax Act from one little Liberal campaign promise. If I were a candidate for any of the professional financial planning designations, I would NOT be concerned about the calculation of the New Basic Personal Amount, but I would want to...

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Federal Budget 2019 - Update as of October 31, 2019

Posted by David Gobeil on

Federal Budget 2019 Candidates for the Fall 2019 offerings of the FPSC Level 1™ Examination and the CFP® Examination are responsible for legislation that has been passed into Law as of November 1, 2019. Bill C-97, An Act to implement certain income tax provisions of the Budget tabled in Parliament on March 19, 2019 and other measures received Royal assent on June 21, 2019: introducing the Canada Training Benefit, which is a refundable tax credit aimed at providing financial support to help cover up to half of eligible tuition and fees associated with training; increasing the withdrawal limit under the Home Buyers’ Plan from...

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