OTTAWA – Canadians will have a little more room to contribute to their Tax Free Savings Accounts as the calendar flips over, but they’ll have to wait until the federal budget to see if there will be any more new savings on their taxes.
“Typically when there are new deductions, they announce them in the budget and you get them in that year,” said Jason Safar, a tax partner at PwC.
“If it is good news they want to get it out and if it is bad news and you announce it, you might as well implement it because people are angry about it anyway.”
And with the federal and provincial governments in deficit slaying mode, Safar said don’t get your hopes up for big moves come budget day.
“I haven’t heard any rumblings of any significant changes,” he said.
For the very wealthy in Ontario though, the new year brings bad news from the tax man — the top rate for the biggest earners in the province will creep a little higher for those earning more than $500,000.
Jeff Paisley, a senior manager at Deloitte, said those earning more than $500,000 a year saw the top combined federal-provincial marginal rate increase to 47.97 per cent from 46.41 this year.
The rate goes up again on Jan. 1, 2013 to 49.53 per cent, he said.
“So, that’s a bit of an increase,” Paisely said. “Does the average Canadian get hit by this? I wouldn’t say so.”
And in Quebec, the marginal tax rate will also edge up, though it kicks in at just $100,000.
“The highest marginal rate in Quebec for 2012 was 48.22 per cent and now the highest marginal rate in Quebec as of Jan. 1 is going to increase to 49.97 per cent,” Paisely said.
The TFSA account contribution limit is going up from $5,000 a year ago to $5,500 for 2013.
Canadians will also see certain income tax and benefit amounts increase two per cent for inflation.
The federal tax bracket thresholds will all increase by two per cent, with the top bracket of 29 per cent not kicking in until taxable income of $135,054 for 2013, up from $132,406 for 2012.
Amounts for several non-refundable tax credits also increase, including the basic personal amount which will stand at $11,038, up from $10,822.
In Ontario, seniors and those who live with them will also be able to take full advantage of the Healthy Homes Renovation Tax Credit that allows people to claim up to $10,000 worth of eligible home improvements that was announced late in 2012.
“Unless someone had a renovation that they were planning to do, they weren’t going to squeeze that in,” Safar said of the measure which could save Ontarians up to $1,500.