Tax system not built to keep up with inflation — and it's hurting some Canadians more than others
All five federal income tax brackets for 2023 were indexed to inflation using the 6.3-per-cent rate. This makes Canada pretty unique. The C.D. Howe report notes that a recent survey of 160 countries revealed that 131 of them do not index tax thresholds so they rise with inflation. In fact, only nine countries, Canada among them, have legislation or regulations in place mandating automatic periodic adjustments in line with inflation.
While most credits and some deductions, such as the basic personal amount, spouse amount, age amount, etc. are also indexed to inflation, others are not. For example, the authors note that the maximum dollar limits under the, although raised periodically since the deduction was first introduced back in 1972, are not adjusted for inflation. The maximum amount of child-care expenses that can be claimed per child under seven years old is currently $8,000.
On the corporate side, the small business deduction, which is available to private corporations , provides small businesses with a lower federal and provincial corporate tax rate on the first $500,000 of net income. This $500,000 threshold hasn’t been changed since 2009, meaning its real value has been cut by more than a quarter.Article content
has not changed since the establishment of the GST back in 1991. After more than 30 years, inflation has cut its real value almost in half. And, each year, as inflation further erodes the threshold, more businesses must register and collect GST. Notwithstanding the potential benefits of registering to claim input tax credits, the falling real value of the registration threshold creates administrative and compliance costs for many small businesses who may otherwise choose not to register.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
High income earners in Canada are already paying their fair share of taxThe top 20 per cent of income earners in Canada already contribute 61.9 per cent of all personal tax revenue. Stop pretending that they’re not paying their fair share
Read more »
Police dog funeral a reminder of their unique bond with handlersConst. Chris Vatali recently returned from a trip to Woodstock with police service dog Royal, where they participated in a memorial service for Woodstock Police Service dog Taz
Read more »
Being successful on social media about financial planning requires an authentic approachFor advisors looking to beef up their social media presence, one expert suggests finding an approach that allows them to be themselves
Read more »
Mayor proposes hiring freeze as city tax hike loomsRead the full story and comment on Tbnewswatch.com
Read more »
Kheiriddin: The carbon tax is coming back to bite the Liberals, hardOnly 32 per cent of Canadians think the carbon tax is effective at reducing fuel consumption — and they\u0027re right
Read more »