Liberal Government Follows Through On Promised Tax Rate Changes

In a Ways and Means Motion passed by the House of Commons on December 9, 2015, the new government introduced the changes to tax rates promised during the recent federal election campaign. Although considerable attention was directed towards increased taxes for high income earners and tax cuts for those in lower tax brackets, the changes to the Income Tax Act (Canada) (ITA) which are proposed in the Ways and Means Motion are likely to have a somewhat broader impact.

Individual Income Tax Rates

Changes to section 117(2) of the ITA will create a new tax bracket for those earning more than $200,000 of taxable income per year. Individuals in this bracket will be required to pay federal income tax at a rate of 33% for earned income over $200,000, which is a 4% increase from the current rate of 29%. On the other hand, individuals in the second-lowest federal tax bracket, those with an annual taxable income of between $45,282 and $90,563 per year, will benefit from a