The big scary budget 2016
Transcript of The big scary budget 2016
![Page 1: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/1.jpg)
The Big Scary
2016 Budget
Presented by:
Tim Miron, CPA, CA
![Page 2: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/2.jpg)
Overview
• Children related items
• Changes not in the budget
• Corporations with partnerships
• Other stuff
![Page 3: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/3.jpg)
Children Stuff
• What happened in 2015
• Universal Child Care Benefit (UCCB)
• Fitness Credit
• Arts Credit
• Canada Child Tax Benefit
![Page 4: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/4.jpg)
Meet the families
• Miron family – 3 kids under 6
• Bauer family – 1 child over 6, 1 under
• Knight family – 2 children over 6
![Page 5: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/5.jpg)
UCCB
• Children under 6 = $160 / month
• Children 6 to 17 = $60 / month
• This amount was taxable
• Ending June 2016
![Page 6: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/6.jpg)
Children’s Activities
• Fitness credit = $150 per child
• Arts credit = $75 per child
• Going away ½ for 2016 non for 2017
![Page 7: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/7.jpg)
CCTB
• The Canada Child Tax Benefit
• Was only eligible for lower income families
![Page 8: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/8.jpg)
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
![Page 9: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/9.jpg)
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
![Page 10: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/10.jpg)
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
![Page 11: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/11.jpg)
Net CCB Benefit
Family Income Miron Bauer Knight
150,000 2,078 406 31
185,000 (722) (1589) (1199)
220,000 (3522) (1824) (1199)
![Page 12: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/12.jpg)
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
![Page 13: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/13.jpg)
Other child related changes
• $1,000 credit to educators
• Saving them $150 a year
![Page 14: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/14.jpg)
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
![Page 15: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/15.jpg)
Change in Tax Rates
• Higher personal tax rate
• Change to corporate investment rates
![Page 16: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/16.jpg)
Personal TaxIn Ontario the top tax rate is 53.53%
![Page 17: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/17.jpg)
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
![Page 18: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/18.jpg)
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.
![Page 19: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/19.jpg)
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
![Page 20: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/20.jpg)
Tax Free Savings Account
2016 Contribution room back down to $5,500
![Page 21: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/21.jpg)
Corporation change
http://www.budget.gc.ca/
![Page 22: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/22.jpg)
Corporation change
![Page 23: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/23.jpg)
Corporation change
http://www.budget.gc.ca/
![Page 24: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/24.jpg)
Corporation change
The Loss of the Small Business limit is not
the end of the world.
![Page 25: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/25.jpg)
Corporate Income Tax
26%
15%
![Page 26: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/26.jpg)
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%
![Page 27: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/27.jpg)
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%
![Page 28: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/28.jpg)
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
![Page 29: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/29.jpg)
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.
![Page 30: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/30.jpg)
Small Business Limit
Previously Scheduled Tax Rates
• 2015 – 15.5%
• 2016 – 15.0%
• 2017 – 14.5%
• 2018 – 14.0%
• 2019 – 13.5%
![Page 31: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/31.jpg)
Small Business Limit
Newly Scheduled Tax Rates
• 2015 – 15.5%
• 2016 – 15.0%
• 2017 – 14.5%
• 2018 – 14.0%
• 2019 – 13.5%
![Page 32: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/32.jpg)
Other Items
• Fund switches will now be taxable
• OAS pension age is back down to 65
![Page 33: The big scary budget 2016](https://reader031.fdocuments.us/reader031/viewer/2022022415/5a67d6b77f8b9aa6128b5365/html5/thumbnails/33.jpg)
Thank you!
Tim Miron CPA, CA
Burlington Office
905-333-5066
@TJMiron@BLRcpas
facebook.com/BLRcpas