January of each year is the opening of “income tax” season– the period of time up until April 30th of 2013 when 2012 income taxes must be filed with the Canada Revenue Agency. Recently I had a constituent request federal income tax rates from the year 2000 in order to compare with the income tax rates for 2013. The results are somewhat interesting and I would like to share them with you for general interest. In the year 2000 there were three federal income tax brackets– the first $30,004 dollars was taxed at a rate of 17%, the next $30,004 up to $60,009 was taxed at a rate of 25% and all income over $60,009 was taxed at 29%.
In 2013 there are two significant changes; the first is that there are now four tax brackets instead of three as was the case in the year 2000. The first income tax bracket now applies on income up to $43,561 and is taxed at a rate of 15%. The second tax bracket is on income between $43,652 up to $87,123 and is at a rate of 22% while the third tax bracket is on income over $87,123 up to $135,054 and is at a rate of 26%.
Obviously the highest tax bracket is now on income in excess above $135,054 and is still taxed at the same rate as was the highest income tax bracket in the year 2000 at 29%. Clearly the most significant changes in income tax rates over the past decade have been reduced income tax rates for lower income Canadians.
The second major change introduced by our Government in 2006 and expanded in many budgets since has been targeted tax relief to help support families and at the same time promote employment that helps to drive our local economies. Targeted tax relief measures include the following: The Family Caregiver Tax Credit, The Medical Expense Tax Credit, The First-Time Home Buyers’ Tax Credit, The Children's Fitness Tax Credit, The Hiring Credit for Small Business, The Children's Arts Tax Credit, The Apprenticeship Job Creation Tax Credit, The Tradesperson's Tool Deduction, The Textbook Tax Credit, The Universal Child Care Benefit, The Tax-Free Savings Account, The Registered Disability Savings Plan, The Canada Employment Credit, The Public Transit Tax Credit and The Volunteer Firefighters' Tax Credit. Although I have had one citizen to date request higher income taxes, the overwhelming majority of taxpayer’s I have heard from welcome tax relief and keeping more of their hard earned net income within the family household.
If you would like more information on these tax credits further information is available on either the CRA website or toll free via the CRA call center. In addition there are also many tax professionals and in some areas volunteers who can be of further assistance. My office will also be sending a mailout, outlining many of these measures for your future reference.
One other major tax change in recent years is the ability to file your income tax return online. The average processing time for an online submitted tax filing is typically two weeks compared to 4-6 weeks for a paper filed return. It should also be noted that the method you choose to file your income tax return in no way increases or decreases the potential for an audit. Income tax is rarely a popular topic among most taxpayers however our Government is proud of the tax relief we have provided to Canadian families. Recently our Government announced public sector pension reforms that will begin the process of re-balancing public sector employer and employee pension contributions to an equal 50-50 cost sharing model. In addition the retirement age for new federal public sector jobs will be increased to age 65. These changes alone will save taxpayers $ 2.6 Billion over the next five years. I encourage all taxpayers to claim any credits that you may be entitled to when you file your 2012 income taxes.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.