(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

Red Deer County has three new confirmed COVID-19 cases

Government says Alberta up to 1,181 total cases

Rimbey textile artists creating hand-made masks

Group has also been helped out by a local business

107 new cases of COVID-19 in Alberta, 5 additional deaths

More than 1,000 cases in Alberta total

WATCH: Town of Blackfalds released COVID-19 update video

Changes include Blackfalds Transfer Station hours of operation, BOLT schedules and staffing updates.

VIDEO: How doctors in Canada will decide who lives and dies if pandemic worsens

Officials in several provinces have been developing guides so that doctors don’t feel alone

A message from Central Alberta Co-op

Please remember to practice social distancing at all our locations.

Canada looking to disinfect used masks, Tam asks they not be thrown away

Best defence against COVID-19 is to stay home as much as possible, wash their hands frequently

Actress-activist Shirley Douglas, daughter of medicare’s Tommy Douglas, dies

‘Sadly she had been battling for her health for quite some time’

Boeing to continue production shutdown due to coronavirus

Company is extending its planned two-week shutdown

COVID-19 case reported at supermarket in Wetaskiwin

Sobeys will not release names to protect employees

Trudeau unveils details for emergency payment for Canadians

Applications for the Canada Emergency Response Benefit will be accepted starting Monday

Drake does the ‘Toosie Slide’ in new video, shows his mansion and empty T.O. streets

New creative outlet during the COVID-19 pandemic: The “Toosie Slide.”

Most Read