Remember, CRA is waiting

January is the start of “income tax season” – the period until April 30 when your income taxes must be filed with the Canada Revenue Agency.

If you follow political discussions, you will likely have heard claims that income taxes have gone up as well as counter claims that they have gone down.

I want to review federal income tax changes over the past 18 years for more context on this subject.

In 2000, there were just three federal income tax brackets:

• $30,004 was taxed at a rate of 17 per cent
• $30,004 up to $60,009 was taxed at a rate of 25 per cent
• all income over $60,009 was taxed at 29 per cent.

In 2013, there were some significant changes.

A fourth income tax bracket, up to $43,561, which would be taxed at a lower rate of 15 per cent.

The second tax bracket was adjusted so that:

• income between $43,562 up to $87,123 was taxed at a rate of 22 per cent
• the third tax bracket on income over $87,123 up to $135,054 was taxed at a rate of 26 per cent.
• Income over $135,054 was taxed at 29 per cent

The net effect of these tax changes was that lower income workers earning up to $43,561 paid two per cent less tax.

On income in the other tax brackets, there were also tax breaks of three per cent with the exception of the highest tax bracket.

In the 2016 tax year, there were again further changes to the tax brackets including the addition of a fifth tax bracket.

For the lowest income earners up to $45,202, there was no change and the income tax rate remained at 15 per cent.

On the next tax bracket from $45,202 up to $90,563, taxes were reduced from 22 per cent in 2015 down to 20.5 per cent.

Income between $90,563 up to $140,388 remained unchanged at 26 per cent and income over $140,388 up to $200,000 was taxed at the same 2015 tax rate of 29 per cent.

The new fifth tax bracket on income over $200,000 was taxed at 33 per cent.

The net effect of these tax 2016 changes was that lower income citizens did not receive a tax break, but those in the middle did.

Higher income earners were taxed either at the same rate or more.

For this current 2018 tax year, the income tax brackets remain unchanged at:

• 15 per cent
• 20.5 per cent
• 26 per cent
• 29 per cent
• 33 per cent

This comparison does not include the elimination of many income tax credits that have occurred since 2016 nor does it account for the lowering of the GST.

It also does not include the Working Income Tax Benefit that is now referred to the Canada Workers Benefit or to the Canada Child Benefit (CCB).

Depending on your income tax situation, you may be paying more or less since 2000.

Given the scale of tax reduction to many income tax brackets in 2013, combined with the middle income tax bracket reduction in 2016, many Canadians are likely paying less federal income tax today.

Although there have been tax reduction efforts federally, most will know that income taxes in many provinces have risen in addition to increases in property taxes.

My question this week:

• Are you satisfied with the total amount of tax that you pay for the services and programs you receive?

I can be reached at [email protected] or call toll free 1-800-665-8711.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.