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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 taxation years.

The following criteria will be changed to refer to the the Maximum New Basic Personal Amount:

  • the criteria for an eligible child for the purpose of the childcare expense deduction will change to whether the child's income exceeds the Maximum New Basic Personal Amount (ITA 63(3));
  • the criteria under which adults not qualifying for the disability tax credit who are nevertheless dependent on another person because of mental or physical infirmity can qualify as preferred beneficiaries, under the preferred beneficiary election in subsection 104(14), will change to if their income (determined before allocations under the preferred beneficiary election) is below the Maximum New Basic Personal Amount (ITA 108(1));
  • the criteria for certain tax provisions in relation to the treatment of retirement savings on the death of an individual in situations where a recipient of the savings is a financially dependent child or grandchild of the deceased individual will change to whether the child's income exceeds the Maximum New Basic Personal Amount (ITA 146(1.1)); and
  • the criteria for a withholding tax exemption on disability assistance payments to beneficiaries of Registered Disability Savings Plans (RDSP) will change to an amount equal to the sum of the beneficiary's Maximum New Basic Personal Amount and the disability tax credit for the year from any payments made before withholding begins (Reg 103.1(2)).

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