New tax brackets for Canada in 2023 – CTV News
In 2022, Canadians experienced high inflation levels as shifts in the global economy began to settle. Canada’s tax brackets are indexed and adjusted to account for inflation.
This means that there are going to be some changes as we move into 2023.
These changes could impact how you’re taxed when you file your 2023 income tax returns next year.
Below, I’ll outline the new tax brackets for this year and discuss some other notable changes that could affect your personal finances.
The new federal tax brackets for Canadians in 2023
In 2023, Canada’s federal tax brackets increased by 6.3% to account for inflation.
Here are the tax brackets for 2023, as outlined by the CRA:
Any Canadians earning less than $53,359 in taxable income per year (but above the basic personal amount of $15,000) will be subject to the base 15% tax rate.
Why are Canada’s tax brackets changing?
Every year, Canada incrementally changes the federal income tax brackets to account for inflation. These tax rates, along with other benefits, tax credits, and payments, are indexed to the inflation rate. Since inflation increased dramatically in 2022, the tax brackets saw considerable changes and were increased by 6.3% for 2023.
As inflation rises, the cost of consumer goods typically increases along with wages. Indexing tax brackets to inflation is a good thing, as it reduces the amount of taxes you pay. If tax brackets didn’t change to account for this, then people would be paying a disproportionately high tax rate based on their income.
For example, imagine a scenario where tax brackets aren’t indexed to inflation for 50 years. By then, wages will be much higher, and nearly everyone will be in the highest tax bracket, even if they are low-income earners. By increasing tax brackets, the government ensures that lower-income earners are not unfairly taxed at a high rate due to inflation.
That being said, Canada’s inflation rates are expected to decrease moving into 2024, likely resulting in a smaller adjustment to the federal income tax brackets.
Tax rate indexation increases by year
Here’s a quick look at how the federal government’s income tax brackets have increased over the past few years to account for inflation levels, based on CRA data:
2023 saw the largest indexation increase in recent years, which is why the tax brackets have changed significantly.
What is the basic personal amount for 2023?
The basic personal amount is a tax credit that all Canadian taxpayers can claim to help reduce the federal income tax they owe. Federal income tax rates don’t kick in until after the individual has earned more than the basic personal amount.
In 2022, the basic personal amount was $14,398. This year, however, the basic personal amount was increased to $15,000. Moving forward, the federal government announced that it would begin indexing the basic personal amount to inflation (which it previously wasn’t).
For higher-income earners, the basic personal amount tax credit decreases incrementally. If you’re in the 29% tax bracket and earn less than $235,675 per year, then you’ll be entitled to claim the full $15,000 basic personal amount.
However, once you reach the 33% tax bracket and earn over $235,675 per year, your basic personal amount decreases to $13,521.
Other notable tax and benefit changes for 2023
Here are some of the other notable changes that may affect your 2023 taxes.
1. TFSA contribution room increase
This year, the annual contribution room for tax-free savings accounts is $6,500, up from the $6,000 contribution room in 2022. Those who have been eligible for the TFSA program since 2009 (when it began) now have a total contribution room of $88,000.
2. EI premiums increase
In 2023, Employers Insurance (EI) premiums are increasing for both employees and employers. Employees are now subject to a 1.63% EI premium, and employers are now subject to a 2.28% EI premium.
3. Introduction of First Home Savings Account (FHSA) in 2023
This year, the government is introducing an excellent new initiative to help Canadians save for their new homes. The First Home Savings Account (FHSA) allows your contributions to grow tax-free as you prepare to purchase your first home.
As long as the money is withdrawn and put towards your first home, it’s non-taxable, like a TFSA. Additionally, the contributions you make to an FHSA are tax-deductible, similar to an RRSP.
How will the new tax brackets affect Canadians?
Tax brackets are indexed for inflation to help keep the tax rate steady, despite changing economic conditions. It’s good to be aware of the updated tax brackets, so you can plan for the year and maximize your RRSP contributions and tax deductions.
The updated tax brackets will help all of those earning $50,197 or more (that was the first threshold for the 20.5% tax rate in 2022), which is now $53,359 in 2023, a significant increase. While tax brackets aren’t that important during salary negotiations, inflation should definitely be mentioned. For example, if you got less than a 6.3% raise in 2022, your buying power will be less than it was in 2021. That point could be brought up during performance reviews with your boss.
If you’re unsure of how to account for the changes yourself, it may be helpful to speak with a licensed financial advisor or accountant.
Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.
Do you have a question, tip or story idea about personal finance? Please email us at firstname.lastname@example.org.
Those With Rare Diseases Need to Wait, as Usual
Science has developed the ability to research, develop and create functional cures for many of our so-called “incurable diseases”, but having the ability to do something and actually doing it are two different things. Medicine has always suffered from a problem with “knowing-doing”. It is the difference between what a doctor actually does for a patient and what can be done with all that we know. Developmental breakthroughs in medicine are allowing doctors to do things they never could imagine before. Sometimes these break-thoughts don’t fit into businesses/governmental financial or regulatory systems, meaning that it can take a long time for patients to actually benefit, a time many patients may not have.
The National Institutes of Health in America invest more than $40 Billion in biomedical research each year, and the private sector twice as much. The discoveries are valued by all, but why is it so hard to use these discoveries?
Science’s ability to engineer medicines has far outpaced how these medicines are actually built, tested, and put into human beings. Artificial Intelligence has assisted the community by mapping the human genome in efforts to cure various diseases. The US Government defines rare diseases as those that affect fewer than 200,000 people in America. Some affect only a handful of people. There are over 7000 different rare diseases, with more than 30 million people in America diagnosed with one of them. That is 10% of the US population. So improving how society can find and care for these patients could have a great impact. Problem is that the health system is not flagging enough people with these diseases, while many individuals don’t even know what disease they may have, or that they indeed have a disease. A.I. steps up front to assist in the recognition, tracking, analyzing, and identifying of these patients through computer-programmed systems. Put one’s symptoms into the machine, and often voila, a point from which a doctor can begin his medical investigation and treatment. A diagnostic odyssey in each individual case.
Artificial Intelligence has a prominent place within our health system, including helping design new treatments, helping predict which treatment is better for which patient, and screening for rare diseases with suggested diagnoses to boot. Why are many with rare diseases often left out in the cold, to search on their own for a cure? Money! Simple.
Who makes medicines, and invests millions in treatments and research for diseases? Pharmaceutical Firms.
What are they but profit centers for investment bankers, massive corporations, and a financial structure centered upon the shareholder, and not the average joe? Solutions can be found, but the willingness to spend way beyond what a firm can make in profits needs to be there. Sure our DNA is constantly changing, and evolving biologically. Making a drug that cures cancer, may cure some, but certainly not all forms since each person is unique, their biology specific to that person. Many doctors realize that their methods are much like witch Doctors, forever experimenting with the specific individual’s condition.
Our Health system is tied to our financial system. That is the root of it. So long as the doctors, hospitals, and researchers are tied to profit (our financial system) the necessary technology, research, and investment will not be found for those with rare diseases. I have a disease that has no cure. My immune system is attacking the tissue in my mouth. It is sorely painful, personally transformative, and damn if you could find a doctor who is a real expert in the field. Since it is rare, the institutions of the industry will not find proper medicine for its management, let alone its cure. I live with it, and the disease manages the way I eat, what I eat, how I clean my teeth, how I sleep, and interact with my partner too. This disease can transfer to another. Great eh!
For those of you who have or know of someone who has a rare disease, all I can say is to be patient. The present-day financial and healthcare systems need to change drastically, with governmental intervention in all aspects of research, planning, and manufacturing of medicines. Out of the hands who care for themselves, and hopefully into the hands of those who care about you and those you love.
Canada is set for its largest alcohol tax increase yet. Here’s what to know
Canadians could soon be paying around a quarter more for a 24-pack of beer thanks to the largest increase yet to a federal tax on alcohol.
The “escalator tax” is set to increase by 6.4 per cent on April 1 unless a change is announced before then, such as when the federal budget is revealed on March 28, according to food distribution professor at Dalhousie University, Sylvain Charlebois.
Charlebois told Global News that the tax, which was introduced in 2017, was designed to automatically increase over time based on the rate of inflation to avoid renegotiating it too often.
Given the amount of inflation Canada has experienced recently, the tax is now set for its biggest increase ever, he noted. Last year, the tax went up 2.4 per cent.
And while a penny a beer might not sound like much of a hike, industry experts say it’s one more factor pushing up costs for producers and distributors that’s likely to have ripple effects on what consumers pay.
Breaking down the cost increase
Charlebois predicts the tax will increase the price of a single beer by one cent, while the finance ministry told Global News in a statement that the amount would be three-quarters of a cent. Charlebois said that the price increase would be visible immediately after the tax is scheduled to be implemented on April 1.
Beer Canada told Global News in a statement that the tax increase will bring up the price of a 12-pack by 10 cents. For a 750 ml bottle of wine, the price could increase close to three cents, according to figures from the Canadian Revenue Agency.
In a statement to the Canadian Press, the Liquor Control Board of Ontario (LCBO) said that a 750 ml bottle of a spirit of 40 per cent alcohol by volume (ABV) may increase 70 cents. Charlebois said that the tax may have a smaller impact on the price of craft beer since it is lower volume and usually at a higher price, but could affect larger manufacturers more.
The tax could have a ripple effect on costs, as well.
Beer Canada said since the tax is a production tax imposed on the brewer at the point and time of production, “it is then magnified by other fees and taxes imposed by distributors, retailers, and provinces, including sales taxes,” making the impact on a 12-pack likely closer to 20 cents.
Along with other inflation factors, beer retail prices are projected to rise 10 per cent in 2023, according to the organization.
Beer Canada notes there has been a 60-per cent increase in barley prices, 40-per cent increase in packaging costs, and a doubling of freight costs.
Industry group Restaurants Canada told Canadian Press it estimates the tax increase will cost Canada’s food-service industry about $750 million a year, with the average casual dining restaurant expected to pay an extra $30,000 towards alcohol.
The carbon tax is also set to increase April 1 to $65 a metric ton of carbon from $50, which Charlebois said could impact alcohol prices as well since most producers do not have completely green supply chains. In addition, provinces individually typically increase their tax on alcohol, as well.
Overall, the escalator tax alone will amount to an extra $125 million a year that Canadians will pay to the government.
“It’s just one tax people don’t need right now,” Charlebois said. “It doesn’t seem like much, but it’s more that the tax burden is only increasing.”
“It’s a lot of pressure,” he added.
Industry calls for no tax increase
There is still the possibility the tax could be scrapped, Sylvain said, as lobbyists are moving against it.
Beer Canada says that Canada has the highest alcohol taxes among G7 nations, with about half the cost of a typical can of beer going to taxes, while up to 80 per cent of a bottle of alcohol is taxed, according to Spirits Canada.
The organization is calling on the federal government to freeze current alcohol taxes until inflation reaches closer to the Bank of Canada’s two per cent target.
“It’s do or die time in terms of action,” CJ Hélie, president of Beer Canada, told Global News. “April 1 is right around the corner and the question will be, does the government’s actions live up to their commitment.”
On March 22, MPs voted 170 to 149 in favour of a motion calling on the government to cancel the alcohol tax increase, sponsored by Conservative Leader Pierre Poilievre.
Helie told The Canadian Press that the escalator tax used to be “digestible” when it was around two per cent, but with more than triple the usual increase, it should now be reconsidered.
“When inflation is through the roof, we need to rethink this automatic formula,” Helie said. “The industry is already in dire straits. Using a rigid formula in a time like this is unacceptable.”
— with files from The Canadian Press
© 2023 Global News, a division of Corus Entertainment Inc.
Principal resigns after Florida students shown Michelangelo statue
A principal of a Florida school has been forced to resign after a parent complained that sixth-grade students were exposed to pornography.
The complaint arose from a Renaissance art lesson where students were shown Michelangelo’s statue of David.
The iconic statue is one of the most famous in Western history.
The 5.17m (17ft) statue depicts an entirely naked David, the Biblical figure who kills the giant Goliath.
The lesson, given to 11 and 12-year-olds, also included references to Michelangelo’s “Creation of Adam” painting and Botticelli’s “Birth of Venus”.
Principal Hope Carrasquilla of Tallahassee Classical School said she resigned after she was given an ultimatum by the school board to resign or be fired.
Local media reported that Ms Carrasquilla did not know the reason she was asked to resign, but believed it was related to the complaints over the lesson.
They also said Ms Carrasquilla had been principal for less than one year.
In an interview with US outlet Slate, the chair of the school’s board, Barney Bishop III, said that last year the principal sent a notice to parents warning them that students were going to see Michelangelo’s David – but that this wasn’t done this year. He called it an “egregious mistake” and said that “parents are entitled to know anytime their child is being taught a controversial topic and picture”.
“We’re not going to show the full statue of David to kindergartners. We’re not going to show him to second graders. Showing the entire statue of David is appropriate at some age. We’re going to figure out when that is,” Mr Bishop said.
On Thursday, Florida’s governor, Ron DeSantis, moved to expand a law that banned public schools from teaching sexual education and gender identity.
Teachers who violate the law face being suspended or losing their teaching licences.
The David was completed by Michelangelo between 1501 and 1504. It was instantly hailed as a masterpiece, with Renaissance artist Giorgio Vasari saying the David “surpassed” any statue that had ever existed before.
Queen Victoria gifted a copy of the David to the South Kensington museum – later the V&A – in 1857. When she first saw the cast, she was apparently so shocked by the nudity that a fig leaf was commissioned to cover up the genitalia.
The V&A’s website says that the leaf was kept “in readiness for any royal visits, when it was hung on the figure using two strategically placed hooks.”
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