The word “taxes” is enough to give most of us a headache. Paperwork, deductions, contributions, Canada Pension Plan (CPP), this type of tax, and that type of tax, federal and provincial — what a nightmare. The good news is the tax-filing deadline for most Canadians is April 30, 2020, which is still months away. And, unless you are making last-minute Registered Retirement Savings Plan (RRSP) contributions, you won’t have to think about your 2019 taxes for a few more weeks.
Nevertheless, as the new year chugs along, an entirely new set of tax changes will come into effect throughout 2020. Many Canadians will see lower taxes, albeit the changes are subtle.
To start, the basic amount Canadians can earn tax-free will increase by $1,160 to $13,229, which will result in lower federal income taxes. This amount is expected to rise to $15,000 by 2023. But this won’t mean much for those in the top tax brackets, who may not see a benefit at all.
The CPP tax rate is rising by 0.15%, that’s an increase of up to $97 in 2020. However, taxpayers will see a decrease in their Employment Insurance (EI) rates. It can save workers outside Quebec up to $20. Since taxpayers in Quebec also contribute to the Quebec Parental Insurance Plan (QPIP) and pay a reduced EI rate, taxpayers can see a decrease of up to $48.
Here are a few additional federal tax changes you can expect:
- The first-time Home Buyers’ Plan (HBP) has been extended to individuals whose marriage or common-law partnership has ended. However, the withdrawal must be made within that year or the four preceding calendar years if they do not meet the first-time home buyer requirement.
- Under certain registered plans, the purchase of advanced life deferred annuities and variable payment life annuities are now permitted.
- Individuals will be able to claim up to $500 in costs paid toward eligible digital news subscriptions in a taxation year.
- The deadline to file a return for taxpayer’s foreign affiliates has been bumped from 15 months to 12 in 2020, and 10 months in years succeeding 2020.
Click on your province or territory for further 2020 tax changes.
Provinces and Territories:
- British Columbia
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island
The 2019-2020 Alberta budget has introduced a tax bracket freeze for personal basic amounts, which may mean paying more in taxes. On the other hand, the provincial government has committed to reducing corporate tax rates from 12% to 8% by 2022. The goal is to create more jobs. However, with the tax cut comes the elimination of at least five business-related tax credits.
The business-related tax credit cuts:
- The Alberta Investor Tax Credit, the Community Economic Development Corporation Tax Credit, and the Capital Investment Tax Credit are being eliminated ahead of schedule.
- The Interactive Digital Media Tax Credit and the Scientific Research and Experimental Development Tax Credit are being eliminated.
Additional changes include:
- Bad news for students — provincial grants have been cut by 7.9%, the tuition freeze is being lifted, and the tuition and education tax credits are being eliminated in 2020.
- The tourism levy will now apply to short-term rentals offered online.
- The Alberta Child and Family Benefit will replace the Alberta Child Benefit and the Alberta Family Employment Tax Credit.
The 2019-2020 British Columbia budget made no changes to both the personal and business tax rates. The budget highlights a need to make life more affordable, provide better services for families, and invest in a strong, sustainable economy.
- Medical Service Plan premiums have been phased out and replaced with an employer health tax as of January 1, 2020.
- The climate action tax credit will increase to $174 per adult and $51 per child on July 1, 2020.
- The early childhood tax benefit will be replaced by the B.C. Child Opportunity Benefit on October 1, 2020. The new benefit will help families with children until 18, instead of limiting assistance to families with children under six years of age.
- The mine allowance tax credit has been extended to the end of 2020.
- The minimum wage is set to increase to $14.60 per hour on June 1, 2020, and to $15.20 per hour by June the following year.
The 2019-2020 Manitoba budget does not include changes to both personal and corporate taxes. However, here are a few tax cuts and tax credit extensions:
- The government cuts sales tax applied to wills, health-care directives, and power of attorneys.
- Large businesses, with retail sales tax remittances greater than $5,000 per month, will be required to file returns electronically.
- The Cultural Industries Printing Tax Credit has been extended to December 31, 2020.
- The Book Publishing Tax Credit has been extended to December 31, 2024.
The 2019-2020 New Brunswick budget, “Acting with Urgency, We Can’t do it Alone,” speaks to the tax burden carried by New Brunswickers and the need for a more affordable and sustainable budget.
- The budget doesn’t contain personal or business tax increases.
- The government proposes to reinstate the New Brunswick tuition tax credit.
The priorities addressed in the budget include building sustainable health care, education, and social services systems.
Newfoundland and Labrador
The 2019-2020 Newfoundland and Labrador budget entitled, “Working towards a brighter future,” contains no tax or fee increases. However, the Temporary Deficit Reduction Levy is ending in 2020, which will mean a tax cut for taxpayers earning $60,000.
The budget focuses on building infrastructure, creating jobs, and advancing healthcare, transportation, education, and tourism.
The 2019-2020 Northwest Territories budget does not include any new tax rate increases or changes, apart from the annual adjustment of property and education mill rates for inflation.
As of July 1, 2019, a carbon tax on fuels applies at a rate of $20 per tonne of greenhouse gas emissions. This will increase by $10 annually until 2022. The revenues will be offered as rebates to all but large emitters as an incentive to reduce emissions.
The priorities included in the budget address community wellness and safety, economic growth, labour force development and land management, environment and climate change, and governance.
The 2019-2020 Nova Scotia budget entitled, “Building a Strong Foundation,” does not include personal or business tax rate changes. Though, as of January 1, 2020, the province will increase the amount of money people on income assistance receive from 2% to 5%, depending on individual circumstances.
Most changes to the budget address improving access to health care, investing in education, creating economic growth, and supporting communities.
The 2019-2020 Nunavut budget doesn’t introduce any new taxes or changes. However, it prioritizes economic growth, expanding public infrastructure, and investing in education and the resource sector.
The 2019-2020 Ontario budget doesn’t include any personal or business tax increases. However, here are some additional findings to note:
- The government has proposed to eliminate the estate administration tax on the first $50,000 of the value of the estate. A tax of $15 for every $1,000 would still apply to the value after $50,000.
- The budget also promises to freeze tuition fees for all publicly funded colleges and universities in the 2020-2021 school year.
The government has set a goal to improve the deficit and work toward a balanced budget by 2023-24.
Prince Edward Island
According to the 2019-2020 Prince Edward Island budget, residents will see no changes to their personal tax rates. However, the basic personal amount will increase to $10,000, and the income tax threshold for low-income individuals will increase by $1,000 to $18,000. This could result in over 1,500 Prince Edward Islanders no longer paying any provincial income tax.
As for businesses, the budget reduces the small business tax rate from 3.5% to 3%.
The 2019-2020 Quebec budget is entitled, “Your priorities, your budget.” The initiatives focus on prioritizing health, education, and the economy. To start, the budget made no changes to corporate or personal taxes.
Additional changes and rebates:
- Quebec has created a new family allowance for those with one or more dependant under the age of 18. The government has created a calculator tool (CalculAide) to estimate Family Allowance payments.
- The return to a single-fee public daycare system may mean rebates for families, depending on their income.
- The government has committed to harmonizing school-tax rates across the province by July 2021.
- On May 1, Quebec’s minimum wage will increase by 60 cents to $13.10, with a goal to up it to $15 per hour by 2023.
- Hydro rates will be frozen as of April 1, 2020, with increases limited to inflation. Residents may also receive money if they were a hydro account holder in 2018 or 2019.
- Starting in the spring, hospital parking will be capped, and the first two hours will be free.
The theme for Saskatchewan’s 2019-2020 budget is, “The Right Balance”, which includes increased funding to classrooms and highway safety, and support for vulnerable families. The budget contains no new taxes or tax increases; however, a few changes have been implemented.
New tax credits and amendments:
- A non-refundable tax credit for volunteer firefighters and medical first responders has been added to the budget. Individuals with at least 200 hours of volunteer service in a year can claim a $3,000 tax credit.
- The Potash Production Tax has been simplified to ensure fair and balanced returns.
Additionally, Saskatchewan is subject to the Greenhouse Gas Pollution Pricing Act (GGPPA), which means a charge does apply to fuels at the time of import or delivery. The current rate is $20 per tonne of carbon dioxide equivalent. This rate will increase by $10 annually on April 1, until 2022.
According to the territory’s 2019-2020 budget, no new changes have been proposed for the 2020 tax year. However, as per the Carbon Pricing Rebate program, the carbon dioxide emissions tax rate will increase on April 1 of each year until 2022. The levy applies to fuel purchases in the Yukon at a current rate of $20 per tonne, increasing by $10 annually.