the big scary budget 2016
TRANSCRIPT
The Big Scary
2016 Budget
Presented by:
Tim Miron, CPA, CA
Overview
• Children related items
• Changes not in the budget
• Corporations with partnerships
• Other stuff
Children Stuff
• What happened in 2015
• Universal Child Care Benefit (UCCB)
• Fitness Credit
• Arts Credit
• Canada Child Tax Benefit
Meet the families
• Miron family – 3 kids under 6
• Bauer family – 1 child over 6, 1 under
• Knight family – 2 children over 6
UCCB
• Children under 6 = $160 / month
• Children 6 to 17 = $60 / month
• This amount was taxable
• Ending June 2016
Children’s Activities
• Fitness credit = $150 per child
• Arts credit = $75 per child
• Going away ½ for 2016 non for 2017
CCTB
• The Canada Child Tax Benefit
• Was only eligible for lower income families
Tally it up – High rate
Miron Bauer Knight
UCCB 5,760 2,640 1,440
Fitness 450 300 300
Arts 225 150 150
Tax (47.97%) (2,763) (1,266) (691)
Net benefit 3,672 1,824 1,119
Tally it up – Max rate
Miron Bauer Knight
UCCB 5,760 2,640 1,440
Fitness 450 300 300
Arts 225 150 150
Tax (53.53%) (3,083) (1,413) (771)
Net benefit 3,352 1,677 1,119
Canada Child Benefit
Family income Miron Bauer Knight
150,000 5,750 2,230 1,230
185,000 2,950 235 0
220,000 150 0 0
Net CCB Benefit
Family Income Miron Bauer Knight
150,000 2,078 406 31
185,000 (722) (1589) (1199)
220,000 (3522) (1824) (1199)
Other child related changes
• Education amount goes away
• $168 a year for PT students
• $558 a year for FT students
• This will not likely impact parents
• Only the tuition carry forward students upon
graduation
Other child related changes
• $1,000 credit to educators
• Saving them $150 a year
Other child related changes
• The Family Tax Cut has been eliminated
• This was a savings of up to $2,000 for
families with children
• Most of our tax planning made this credit
redundant
Change in Tax Rates
• Higher personal tax rate
• Change to corporate investment rates
Personal TaxIn Ontario the top tax rate is 53.53%
Personal Tax
• Canada works on a staircase system
• The higher up the staircase the more tax
you pay
• But only on the income above that stair
Personal Tax
• Personal income > $200,000 increased 4%
• Top tax rates
150K = 47.97%
200K = 51.97%
220K = 53.53%
If your income is $250K your tax rate just went
up $2,000.
Corporate Investment Rate
• Tax rates on investments increased 4%
• The increase is on refundable tax
Only an issue if investment income is >
dividends paid out to SH
Tax Free Savings Account
2016 Contribution room back down to $5,500
Corporation change
http://www.budget.gc.ca/
Corporation change
Corporation change
http://www.budget.gc.ca/
Corporation change
The Loss of the Small Business limit is not
the end of the world.
Corporate Income Tax
26%
15%
Tax Comparison
46% Tax
rate
53.53% Tax
Rate
15% Tax
Rate
26% Tax Rate
Extra Income $20,000 $20,000 $20,000 $20,000
Income Tax 9,200 10,706 3,000 5,200
Net after tax
Cash
$10,800 9,294 17,000 14,800
Increase in after tax cash 57% / 83% 37% / 59%
Corporate Income
15% Tax 26% rate Capital
Gains
Dividend
Income
Interest
(other)
Extra Income $10,000 $10,000 $10,000 $10,000 $10,000
Corp Tax 1,500 2,650 975 - 1,950
Refundable tax - - 1,533 3,833 3,067
Total Tax 1,500 2,650 2,508 3,833 5,017
High Div. rate 36.97% 29.52%
Max Div. rate 45.30% 39.34%
Scenario
Old way No SBL
Corporate Income 117,647 117,647
Corporate Tax 17,647 30,588
Dividend 100,000 87,059
Personal Income Tax 16,379 6,432
Net after tax Cash 83,621 80,629
Cost of change 2.5% 2,992
Corporation change
What will be slowed is the amount of
savings.
If you had $1,000 going to investments
monthly you could have as little as $870
left.
Small Business Limit
Previously Scheduled Tax Rates
• 2015 – 15.5%
• 2016 – 15.0%
• 2017 – 14.5%
• 2018 – 14.0%
• 2019 – 13.5%
Small Business Limit
Newly Scheduled Tax Rates
• 2015 – 15.5%
• 2016 – 15.0%
• 2017 – 14.5%
• 2018 – 14.0%
• 2019 – 13.5%
Other Items
• Fund switches will now be taxable
• OAS pension age is back down to 65
Thank you!
Tim Miron CPA, CA
Burlington Office
905-333-5066
@TJMiron@BLRcpas
facebook.com/BLRcpas