(File Photo)

Lower taxes, new RRSP rules among 2020 changes in Canada

$75 credit for digital news subscriptions and Alberta now has a federal carbon tax

Federal changes coming into effect Jan. 1 will lower taxes for most Canadians and affect retirees, recently separated individuals who want to use their retirement savings to buy a home, and digital news consumers.

The basic amount most Canadians can earn tax-free is going up on Jan. 1, resulting in slightly lower federal income taxes.

The increase in the basic personal amount was promised by the Liberals during the federal election campaign and is being phased in over four years until it reaches $15,000 in 2023.

For this year, the exemption amount will increase from $12,069 to $13,229. That will result in federal income tax savings of $113 in Quebec and $138 in the rest of Canada, according to the Canadian Taxpayers Federation.

The benefit will be lower for anyone earning more than $150,473 during the year and will be reduced to zero for Canadians with incomes above $214,368.

The tax cut will also be offset on individual paycheques by an increase in Canada Pension Plan premiums of up to $97, the CTF calculated. At the same time, employment insurance premiums will decrease, producing savings of about $20 for workers outside of Quebec, where the EI premium benefit will add up to $48 for some individuals.

Overall, residents of Ontario and Quebec earning less than $100,000 annually will see net savings of between $55 and $116, the federation estimated.

Also effective Jan. 1, Canadians experiencing a breakdown in their marriage or common-law partnership can qualify to withdraw money from their registered retirement savings plan, without incurring a tax penalty, to buy a home.

The Finance Department said individuals who make a withdrawal in the year a breakup occurs, or in the four preceding calendar years, can access the Home Buyers’ Plan, even if they are not a first-time home buyer.

It allows first-time home buyers to withdraw up to $35,000 from an RRSP to put toward a down payment without having to pay tax on the withdrawal.

KEEP READING: Hiking carbon tax to $210 cheapest way to hit Canada’s climate targets, commission says

Among the other federal tax changes coming into effect:

— Canadians who pay up to $500 for digital news subscriptions can apply for a $75 tax credit.

— Certain journalism organizations operating as not-for-profits will be allowed to register to receive donations from Canadians who can claim the amount for a charitable donation tax credit. Businesses donating money can also apply for tax savings.

— Two new types of annuities are being permitted under the tax rules for certain registered plans to provide Canadians with greater flexibility in managing their retirement savings.

— And, the federal carbon tax is being implemented in Alberta. The $20-per-tonne charge for carbon emissions will add to the cost of gas, diesel and heating fuels. Albertans had been paying a provincial carbon tax until it was abolished by the UCP government less than two months after the party won the Alberta election in the spring. Canadians in other provinces are already paying some form of carbon tax.

Terry Pedwell, The Canadian Press

Like us on Facebook and follow us on Twitter

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

White Rock cadets nab medals at Vernon competition

Thirteen members of 907 Squadron compete at regional meet

Surrey Eagles start playoffs on the road in Chilliwack

South Surrey junior ‘A’ squad back in BCHL playoffs for second time in six years

White Rock’s Coldest Night raises $102K

390 walkers participated in seventh-annual event

Girls, women try their hand at marine rescue in Surrey

Achieve Anything Foundation, RCMSAR Crescent Beach host ‘Operation: This IS You! Saving Lives at Sea’

VIDEO: 2020 BC Winter Games wrap up in Fort St. John as torch passes to Maple Ridge

More than 1,000 athletes competed in the 2020 BC Winter Games

Snowfall warning in effect for the Coquihalla Highway

An unstable airmass is producing heavy flurries over parts of the southern highway passes

B.C.’s seventh coronavirus patient at home in Fraser Health region

Canada in ‘containment’ as COVID-19 spreads in other countries

Fraser Health warns some schools of possible COVID-19 exposure

A sixth COVID-19 patient is a woman in her 30s in the Fraser Health region who recently returned from Iran

Harvey Weinstein found guilty of sex crimes in landmark #MeToo trial

The cases against the Hollywood mogul started the #MeToo movement

Initial police report of 2015 accident was ‘inaccurate’ Langley RCMP say

Online statement issued to clarify that victim was not in the middle of the road

CRA puts focus on paper returns as tax-filing season opens

The federal tax collector expects to handle about two million paper returns this calendar year out of roughly 26 million filings

Teck withdraws application for Frontier mine, citing discourse over climate change

The Vancouver-based company said it will take a $1.13-billion writedown on the Frontier project in Alberta

B.C. VIEWS: Pipeline dispute highlights need for clarity

As the B.C. treaty process grinds on, uncertainty remains

Most Read