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Email this4:01 pm
December 23, 2011
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Has any one see the official Federal and BC Provincial:
Personal tax rates
Age credits
Etc.
For 2017
6:07 pm
April 6, 2013
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I think one needs to wait at least for Statistics Canada to compute the September 2016 CPI numbers.
Section 117.1 of the Income Tax Act prescribes "the Consumer Price Index for the 12 month period that ended on September 30 next before that [taxation] year" as an input for the inflation adjustment.
6:55 pm
December 23, 2011
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Thank you, Norman.
8:08 pm
October 21, 2013
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taxtips.ca usually posts this info fairly promptly, when available.
A rough guide to inflation can perhaps be had by looking at the increase in OAS payments from Oct 2015 to Oct 2016.
Oct 2015 - $569.95
Oct 2016 - $578.53
An increase of 1.5%
8:59 am
December 12, 2009
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kanaka, wow, do the marginal tax rates and non-refundable tax credits change, on their own, for inflationary, disinflationary or deflationary adjustments? I didn't know that. The Liberals have lowered the second tier (I believe) marginal tax bracket from like 22.5 to 20.5 percent, which is hugely beneficial. I hope they continue eliminating "boutique" tax credits like the children's fitness, arts, textbook and other credits. The "age" amount is one such credit that is becoming obsolete with the advent of both (a) pension income splitting and (b) TFSAs, which benefit retirees far more greatly.
In an ideal world, I'd even eliminate the RRSP tax deduction but with the decline of defined benefit pension plans, these are an important savings tool for my generation ("Y", possibly "X" but there doesn't seem to be a definitive answer on the post-"Baby Boom" eras) and younger so I'd keep those. Get rid of the "moving expense" deduction, restructure the "public transit" tax credit into a "public transit" flat tax levy assessed on all taxpayers but with a corresponding 100% deduction for those with family net incomes under the national "poverty line" and adjusted for inflation and earmark those funds into a federal "public transit capital investment or operating subsidy fund," separate from the Consolidated Revenue Fund and axe any other deductions I can't think of. In its place, implement a "universal basic income," which would also eliminate Old Age Security, Guaranteed Income Supplement or the Spouses Allowance and put it on a sounder, more equitable footing, though I'd still require 10 years of Canadian permanent residency to tap into it. All taxpayers, young and old, would be eligible for the "universal basic income" and it would gradually be withdrawn once you earn over a certain threshold and be completely eliminated at $75,000 per taxpayer. Manage it separately as part of a Universal Basic Income Operating Account, similar to the way Employment Insurance is managed. I'd keep the Canada Pension Plan, as that's paid for by taxpayers and earns solid investment returns for the long-term. 
As a result of a Universal Basic Income, this would also likely allow us to restructure all public sector-sponsored pension plans such as the RCMP and civil servant to reduce the amount of benefits they pay future and, possibly, current retirees (as they'd now be getting all or part of a Universal Basic Income, which would be substantially higher than an Old Age Security) and also reduce the amount the employer (i.e., government) contributes and increase the amount the employee contributes. Radical? Possibly, but I think it could work. 
Cheers,
Doug
9:36 am
April 6, 2013
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Marginal tax rates (like 15%, 20½%, 26%, 29%, and 33%) are not automatically inflation adjusted. It is the dollar thresholds for each tax bracket that are adjusted.
CRA has been publishing the inflation adjustments in their Fact Sheets section around the end of the year.
The latest, for the 2016 taxation year, is
2016 Indexation adjustment for personal income tax and benefit amounts (2015-12-08).
10:31 am
December 23, 2011
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Doug said
kanaka, wow, do the marginal tax rates and non-refundable tax credits change, on their own, for inflationary, disinflationary or deflationary adjustments? I didn't know that. The Liberals have lowered the second tier (I believe) marginal tax bracket from like 22.5 to 20.5 percent, which is hugely beneficial. I hope they continue eliminating "boutique" tax credits like the children's fitness, arts, textbook and other credits. The "age" amount is one such credit that is becoming obsolete with the advent of both (a) pension income splitting and (b) TFSAs, which benefit retirees far more greatly.
In an ideal world, I'd even eliminate the RRSP tax deduction but with the decline of defined benefit pension plans, these are an important savings tool for my generation ("Y", possibly "X" but there doesn't seem to be a definitive answer on the post-"Baby Boom" eras) and younger so I'd keep those. Get rid of the "moving expense" deduction, restructure the "public transit" tax credit into a "public transit" flat tax levy assessed on all taxpayers but with a corresponding 100% deduction for those with family net incomes under the national "poverty line" and adjusted for inflation and earmark those funds into a federal "public transit capital investment or operating subsidy fund," separate from the Consolidated Revenue Fund and axe any other deductions I can't think of. In its place, implement a "universal basic income," which would also eliminate Old Age Security, Guaranteed Income Supplement or the Spouses Allowance and put it on a sounder, more equitable footing, though I'd still require 10 years of Canadian permanent residency to tap into it. All taxpayers, young and old, would be eligible for the "universal basic income" and it would gradually be withdrawn once you earn over a certain threshold and be completely eliminated at $75,000 per taxpayer. Manage it separately as part of a Universal Basic Income Operating Account, similar to the way Employment Insurance is managed. I'd keep the Canada Pension Plan, as that's paid for by taxpayers and earns solid investment returns for the long-term.
As a result of a Universal Basic Income, this would also likely allow us to restructure all public sector-sponsored pension plans such as the RCMP and civil servant to reduce the amount of benefits they pay future and, possibly, current retirees (as they'd now be getting all or part of a Universal Basic Income, which would be substantially higher than an Old Age Security) and also reduce the amount the employer (i.e., government) contributes and increase the amount the employee contributes. Radical? Possibly, but I think it could work.
Cheers,
Doug
Whew!!! All I am looking for is the the new tax rates and any credits that have changed....as that DOES happen. I am a youngster and want to stay in the lowest tax bracket and secondly, but not hugely important max out on credits and more importantly, manage a withdrawal amount from our RRIF accounts without impacting on the latter. The RRIF withdrawal goes to TFSA. I see huge benefits to wind down RRSP/RRIF even if you don't need to use.
Some tax changes I would like to see.
No income tax on OAS or CPP
No income tax on interest based on age and a sliding threshold amount.
The latter is based on the current rates controlled by the Feds to coddle "some" the younger and irresponsible folks at the expense of the elderly that depend on using interest to supplement income.
11:29 am
October 21, 2013
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I was under the impression that the Personal Amount and the Age Amount were inflation adjusted, and that the bracket limits also creep up according to inflation. I agree that the marginal rates themselves are not automatically adjusted.
I believe the rate change to which Doug refers comes into effect in 2016, so will not be different for 2017. It's a decrease of 1.5%.
I don't believe there are any significant Federal changes for us "youngsters" in 2017. If there is another budget, there could still be changes, even if the budget is in 2017. Sometimes new measures take effect immediately. There may also be a $500 bump-up in the TFSA contribution but this has not been announced yet and may not happen for next year. I believe there is a formula which determines this, apart from any add-ons which the government could enact. This gov't has said it will not do the latter, but they did re-institute the periodic bump-ups.
People whose income is limited to OAS and CPP rarely pay tax anyway because they tend not to be the people who receive maximum CPP. However, for those who opt to postpone receipt of same past age 65, thus increasing CPP income significantly, there could be some tax payable, depending on how much CPP they collect.
With the OAS clawback in place, people with higher incomes will be paying regardless of whether there is tax on it.
The Age Amount is by no means obsolete for seniors on very low incomes. They generally don't have TFSAs or income splitting. Also, being a senior brings with it widowhood and the forced ending of income splitting.
12:38 pm
October 21, 2013
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I suspect that the best way to manage the fact that interest income is not given any preferential treatment, for seniors who depend on it, is to take the capital and just buy life annuities which cover both spouses. Spread out the purchases to diversify rates of return. Yes, you'll use up the capital, but that's what it's there for, for you to spend. If you want to preserve the capital for a legacy, that's your choice, but should not affect tax rates, IMO.
10:17 am
April 6, 2013
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Loonie said
I suspect that the best way to manage the fact that interest income is not given any preferential treatment, for seniors who depend on it, is to take the capital and just buy life annuities which cover both spouses. …
I'm suspicious of that. One may end up with lower taxes with the life annuity because the rate of return from the annuity is actually lower and a significant part of the payout is just return of the principal.
According to the table in Globe & Mail (Jul. 29, 2016): Buying a prescribed annuity? Act fast, a $100,000 life annuity for a 75 year old male, with a 10 year minimum guarantee, pays out about $7,776 a year.
The annuitant needs to survive another 13 years, to his 88th birthday, before the rate of return turns positive!
11:30 am
October 27, 2013
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The reason to buy it is for the longevity risk. If a 75 yr old thinks s/he might live to 90+ but their money has a good chance of running out before then, then buy a life annuity that takes away that risk. Yes, that 75 yr old might drop dead well before 88 but that is how the annuity issuer funds those that live longer than 13 years. Life annuities insure the risk.
12:03 pm
December 12, 2009
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Loonie said
I was under the impression that the Personal Amount and the Age Amount were inflation adjusted, and that the bracket limits also creep up according to inflation. I agree that the marginal rates themselves are not automatically adjusted.
I believe the rate change to which Doug refers comes into effect in 2016, so will not be different for 2017. It's a decrease of 1.5%.
I don't believe there are any significant Federal changes for us "youngsters" in 2017. If there is another budget, there could still be changes, even if the budget is in 2017. Sometimes new measures take effect immediately. There may also be a $500 bump-up in the TFSA contribution but this has not been announced yet and may not happen for next year. I believe there is a formula which determines this, apart from any add-ons which the government could enact. This gov't has said it will not do the latter, but they did re-institute the periodic bump-ups.
People whose income is limited to OAS and CPP rarely pay tax anyway because they tend not to be the people who receive maximum CPP. However, for those who opt to postpone receipt of same past age 65, thus increasing CPP income significantly, there could be some tax payable, depending on how much CPP they collect.
With the OAS clawback in place, people with higher incomes will be paying regardless of whether there is tax on it.The Age Amount is by no means obsolete for seniors on very low incomes. They generally don't have TFSAs or income splitting. Also, being a senior brings with it widowhood and the forced ending of income splitting.
That's right, Loonie. I didn't know if the new marginal tax rate for that one bracket is effective in 2016 or 2017. Thanks for clarifying!
As for the others, I said I'd "like to see" the elimination of many "boutique" tax credits, including the age amount, and also OAS and GIS. However, in their place, I'd like to see a Universal Basic Income created that provides a higher amount payable than OAS and GIS would but would be payable to all taxpayers and then decrease on a sliding scale, yes, and be completely eliminated once someone makes at least $75,000. It would be more fair and equitable to all taxpayers, not just seniors. Seniors would basically have CPP, a Universal Basic Income (unless they made over $75,000) and any private investment, RRSP/RRIF or pension payments but, for those that enjoy super-lucrative private pensions and have large RRSPs that earn, let's say, $75,000 or more each net of the pension split, I'd argue they don't need a Universal Basic Income and should be helping to pay for the Universal Basic Income that helps low and middle income taxpayers.
Cheers,
Doug
6:01 pm
October 21, 2013
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Norman1 said
Loonie said
I suspect that the best way to manage the fact that interest income is not given any preferential treatment, for seniors who depend on it, is to take the capital and just buy life annuities which cover both spouses. …
I'm suspicious of that. One may end up with lower taxes with the life annuity because the rate of return from the annuity is actually lower and a significant part of the payout is just return of the principal.
According to the table in Globe & Mail (Jul. 29, 2016): Buying a prescribed annuity? Act fast, a $100,000 life annuity for a 75 year old male, with a 10 year minimum guarantee, pays out about $7,776 a year.
The annuitant needs to survive another 13 years, to his 88th birthday, before the rate of return turns positive!
I was not suggesting a 10-year guarantee. I was talking about a life annuity for a couple. This would involve taking the risk that both could die in an accident tomorrow and there would be nothing left over for heirs, but does ensure income if they live to 110. With no guarantee, it ought to bring a bigger monthly return. I assume this kind of annuity is still offered.
As AltaRed suggests, it's about insuring income, no matter how long you live, which is the problem Doug wants to solve.
We ought not to underestimate how long that might be either. I was recently at a get-together with 10 old friends, all in their 60s. Six of them still have at least one living parent, almost all of whom are in their 90s! They were all born in different countries and into very different situations from wealthy to poor. And that's the generation older than me! If my genes have anything to do with it, I should live to 100 or so.
I have no problem, personally, with a guaranteed income system of some sort, but I don't think it would have a snowball's chance in Hades of being passed. I'm surprised nobody has leapt to try to trounce the idea here yet.
7:36 pm
October 27, 2013
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Loonie said
I have no problem, personally, with a guaranteed income system of some sort, but I don't think it would have a snowball's chance in Hades of being passed. I'm surprised nobody has leapt to try to trounce the idea here yet.
It has been discussed in other forums and it tends to get trounced by those who are already, or about to, benefit immensely from OAS. The problem with OAS (which is really a social program, not a pension) as it stands is the clawback thresholds are way too high and it is not based on family income. A cpl could have combined income of over $140,000 and not be in clawback territory. That richness is a reckless giveaway. What we really need to do is overhaul OAS and GIS, take current OAS excesses, and provide some kind of income 'safety net' for a wider range of folk, not just those 65 and over. Sadly, nothing will be done because of the very vocal and voting senior demographic.
8:04 pm
April 6, 2013
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Loonie said
I was not suggesting a 10-year guarantee. I was talking about a life annuity for a couple. This would involve taking the risk that both could die in an accident tomorrow and there would be nothing left over for heirs, but does ensure income if they live to 110. With no guarantee, it ought to bring a bigger monthly return. I assume this kind of annuity is still offered.
No guarantee period life annuities are still available. But, the difference is not much.
Through RBC Insurance, a 75-year old Ontario male (born May 1, 1941) would receive
- $640.29 per month ($7,683.48 per year), with a 10 year guarantee, and
- $692.95 per month ($8,315.40 per year), with no guarantee,
for $100,000. Not having a guaranteed minimum number of payments moves the breakeven point earlier by one year, from 88th birthday to 87th birthday.
As AltaRed suggests, it's about insuring income, no matter how long you live, which is the problem Doug wants to solve.
We ought not to underestimate how long that might be either. I was recently at a get-together with 10 old friends, all in their 60s. Six of them still have at least one living parent, almost all of whom are in their 90s! They were all born in different countries and into very different situations from wealthy to poor. And that's the generation older than me! If my genes have anything to do with it, I should live to 100 or so.
…
I agree. Life annuities are excellent for removing longevity risk. As an investment, they are quite good for those who do live to 100. However, at 75 years old, the male life expectancy is currently to about 88 years old.
12:33 pm
December 12, 2009
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AltaRed said
Loonie said
I have no problem, personally, with a guaranteed income system of some sort, but I don't think it would have a snowball's chance in Hades of being passed. I'm surprised nobody has leapt to try to trounce the idea here yet.
It has been discussed in other forums and it tends to get trounced by those who are already, or about to, benefit immensely from OAS. The problem with OAS (which is really a social program, not a pension) as it stands is the clawback thresholds are way too high and it is not based on family income. A cpl could have combined income of over $140,000 and not be in clawback territory. That richness is a reckless giveaway. What we really need to do is overhaul OAS and GIS, take current OAS excesses, and provide some kind of income 'safety net' for a wider range of folk, not just those 65 and over. Sadly, nothing will be done because of the very vocal and voting senior demographic.
Thanks to AltaRed and Loonie for correctly understanding my post.
AltaRed, while I'm warming to a universal basic income for all ages, essentially you've "hit the nail on the head" in that it must have an appropriate, graduated scale on which it is clawed back in full and, given that it would be generous to low and moderate income persons, must also replace most "tax expenditures" (essentially, lost potential government revenue) in the form of non-refundable and refundable "boutique" income tax credits to make it sustainable from a cost perspective. And you're right, too few people realize that Old Age Security is a social program, funded from income tax revenues, not a separate, mandatory retirement account to which we all contribute (i.e., Canada Pension Plan, which absolutely should continue and with which I'll gladly contribute a higher percentage of my earnings given that the employer matches it dollar for dollar), and think they're "entitled" to it because they've "paid into it." I guess...if you count income taxes as contributions, then maybe, but income taxes are also our social obligation (for which we permit some rebating with charitable contributions and which I support). The Conservatives, in their "wisdom," thought to raise the retirement age to 67 for Old Age Security and full CPP eligibility. That may be necessary but I argued: why not reduce the OAS clawback threshold instead? Instead of starting the clawback at $70,000-$75,000 per person (or $140,000-150,000 per family unit), why not start the OAS clawback at $50,000 and end it at $75,000? Couples earning over $100,000 would still receive some OAS but see it clawed back entirely much, much earlier.
As an example, I worked in the bank and I frequently would see people who clearly didn't need OAS, mainly doctors and medium-sized business owners with extensive family trusts and personal holding companies, still have full OAS, which they jokingly referred to as their "mad money."
To Loonie's point about people underestimating their age to which they'll live, I think that's generally the case (though I'm not in favour of annuities at this point as, with record low interest rates, they're really expensive and even more so if you die after their 5- to 10-year "guaranteed" period, at which point they keep your entire annuity plan assets). I always estimate that I'll live to be 95 and plan for that. On the off chance I outlive that, I'll ration myself to bread, jam and water every day. 
Cheers,
Doug
2:11 pm
October 21, 2013
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The problem with rich people claiming the OAS and not getting it clawed back could perhaps be addressed by removing the loopholes that allow them to be in a no-clawback zone in the first place.
I find it interesting that people with a lot of money often (a) pay very little in personal income tax; (b) complain about high taxes, always citing as examples the highest bracket; and (c) think that they are the best qualified to run whichever country they live in, so that they can spend other people's income taxes.
I am very much in favour of beefing up the CPP. This is an enforced savings plan which could provide very well for the old age of working people. I see people throwing away money that they ought to be saving on ill-considered indulgences. Later, they will be needing the GiS from the rest of us.
I fault the financial planning industry for encouraging people to think they won't live past 90. It allows them to project higher rates of return. I only ever met with one of this breed in person, and had a hard time convincing him that I wanted and needed projections to at least age 100. He didn't seem to know how to do it. I guess they don't teach that in financial planning school.
I have several people in my family tree, unrelated-to-each-other, who have exceeded 100 years, the oldest being 106, and countless others in their 90s. So, even though I don't really expect to match any of them, I find the thought of annuities very comforting. They're still a pretty good deal as insurance if you're in your 70s when you buy them, and you can improve your odds of getting a good return by spreading out the purchases over time. In addition, you don't have to be worrying about managing your investments or worrying about somebody else managing them, as you are less able to do it yourself. Rates are a bit below what they have sometimes been, but not as low as many people think. The insurance companies know that they are long-term things and that rates will eventually come up.
.
2:58 pm
December 12, 2009
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I agree with all your points on reducing the OAS clawback threshold, eliminating income tax loopholes for the wealthy and strengthening the CPP, Loonie.
In terms of the financial planner comment, that, too, is interesting! If he can do a projection on income requirements for expected expenses to age 90, surely it's a few taps of a mouse, a few extra lines in Excel and one would have a projection to age 100.
And as for annuities, I just think they're high cost right now. The time to buy them, obviously, is when interest rates are higher (which is why the insurers are struggling have guaranteed payouts for existing beneficiaries at higher interest rates!). I'd be curious if there's a "free tool" to calculate the year at which point one would "break even," and then profit/become a "liability" rather than an "asset" to the annuity-issuing life insurance company, from an annuity. I guess...if it was some time in the early 80s, I'd consider an annuity but, to hedge my bets, I'd probably buy a 10- to 15-year term life insurance policy, though buying one of those at age 70 likely would be costly and you'd have to make sure it'd still be eligible after age 71.
Cheers,
Doug
8:19 pm
October 21, 2013
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The problem with timing purchase of annuities is that the optimum time in terms of rates is not necessarily the optimum time in terms of personal financial planning. This becomes much more obvious when you hit approx. age 70.
The "experts" whose opinions I have read seem to think that it's best to buy them gradually. Within that, there are two camps. One says buy them approx. ages 68-75; the other says to wait til 80 when you'll get a better return due to reduced longevity.
I think the latter is referring primarily to finding a way of spreading out RIFs in a way that may be more to your benefit than following CRA's mandatory withdrawals, by maintaining a consistent return. The non-registered ones appear to be seen as being more beneficial if you get them earlier, because of the tax advantage.
7:58 pm
April 6, 2013
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For 2017 taxation year, the inflation adjustment ended up being 1.4%.
CRA has the official 2017 federal tax brackets and benefit amounts at Indexation adjustment for personal income tax and benefit amounts.
Please write your comments in the forum.