Tax Changes for 2020
Welcome to 2020!
Here’s a quick breakdown of some of the tax changes for 2020, sourced from an article by Jamie Golombek for the Financial Post.
1. Increases to the tax bracket thresholds
This is done every year to income tax and benefit amounts to accommodate for inflation (this year, a 1.9% rate). Increases to the tax bracket thresholds and various amounts relating to non-refundable credits took effect on January 1st. Increases in amounts for certain benefits, such as the GST/HST credit and the Canada Child Benefit do not take effect until July 1st of this year.
2. Contributions to Canada Pension Plan
The rate for contributions is up from 5.1% to 5.25%. This makes a greater impact to self-employed individuals who pay both the employee and employer portion, making it a total of 10.5%. Because of these changes, it means that the maximum contribution for employers and employees is up slightly from last year.
3. Basic Personal Amount (BPA)
If you aren’t aware, in Canada, individuals have what’s called a BPA. Basically this was created to help all Canadians cover their “basic needs” and ensures that no federal income tax is imposed on a portion of income that you earn. The change this year, is that the amount is increasing above the usual percent designated for inflation (which will gradually increase over the next two years). It will also be designed to benefit lower income individuals, and wealthy individuals will not be benefiting from these changes (essentially, helping those who need it the most). =
4. Employment Insurance Premium Rate & Maximum
The EI rate for 2020 is dropping slightly from 2019, from 1.62% to 1.58% of insurable earnings.
Financial Post: Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Financial Planning & Advice Group in Toronto. Link to source here.