Ottawa, December 11 (CINEWS): Professionals and small business owners broke out into a sweat as the Liberals confirmed their decision to hike taxes on incomes above $200,000. Their uncertainty was fueled by the prospect that the announced tax hike on Canada’s top one percent of earners from January 1, is just beginning of the Liberal plan to get those in the high income bracket to pay more.
The middle-income group on the other i.e. those earning between $44,701 and $89,401 will receive a tax break. And the tax hike on the top bracket is expected to partially offset this tax break.
While salaried employees might not be able to do much about the proposed income tax hike, the fear is that small businesses might have options. Given that many bring in family members and pay them salaries, the hike may not generate the funds it is expected to. Professionals like doctors, dentists and lawyers are also feeling the heat.
Canadians will remember that the Liberals campaigned hard on a promise to cancel tax breaks and benefits for the wealth and lower the second income-tax bracket. They had also proposed to end the income splitting introduced by the Harper government.
Some proposed changes
• The rate for income tax on middle-income bracket ($45,282 to $90,563) will be reduced from 22 per cent to 20.5 per cent. This means that individuals at the top of the income bracket will save them $680 a year starting in 2016.
• A new rate of 33 per cent will be charged on income over $200,000
• The previous top bracket of 29 per cent will now only apply to earnings between $140,388 and $200,000.
• The annual contribution limit for tax-free savings accounts would fall back to $5,500 for 2016, but would then be indexed to inflation.
The Liberals also promised to introduce to replace a suite of measures and payments families with young children now receive — including the Universal Child Care Benefit.