Cooler inflation in 2023 is affecting how much Canadians will pay in income tax this year.
“Since inflation has cooled in 2023, the increase to the 2024 tax brackets is relatively modest compared to the increase we saw last year,” said Ameer Abdulla, a partner at tax consulting firm EY Canada in Waterloo, Ont., in an email to CTVNews.ca.
“Generally, where an individual’s income remains constant but tax brackets increase, an individual can expect to see their income tax liability decrease,” Abdulla added. “Most taxpayers would view this outcome as a ‘good thing.'”
The indexation increase for 2024 is 4.7 per cent, according to the Canada Revenue Agency (CRA). That’s lower than the 6.3 per cent increase in 2023 – the largest in several years. In 2021, the increase was just one per cent.
While tax rates haven’t changed this year, tax brackets have been adjusted, Abdulla said.
WHAT IS A TAX BRACKET?
A person’s entire income isn’t taxed at a single rate. Instead, it’s split up into brackets, each with its own rate.
Tax brackets are the different tiers of taxable income, which have higher tax rates applied to them as income increases, Tara Benham, national tax leader at Grant Thornton in Duncan, B.C., said in an email to CTVNews.ca.
Tax brackets are indexed and adjusted based on the consumer price index each year, and tax rates are the percentage of their income people pay to regional and federal governments.
Rates are based on taxable incomes, which refer to incomes after deductions, credits and exemptions are applied. In Canada’s marginal tax rate system, the higher the taxable income, the higher the income tax rate.
The federal government determines the federal income tax rates for individuals, but each province and territory decides its own rates, according to the CRA. These provincial and territorial tax rates are charged in addition to the federal amounts.
FEDERAL TAX BRACKETS FOR 2024
For 2023 returns to be filed by April 30 for everyone except self-employed workers, bracket thresholds rose again this year, indexed by inflation.
Sharon Perry, an accounting and tax specialist from Coquitlam, B.C., broke down the difference for CTVNews.ca.
Consider a taxpayer working as an employee at a company who made $60,000 per year in 2023 and expects to make the same amount in 2024.
In 2023, the first $53,359 of the person’s $60,000 income would be taxed at 15 per cent, which amounts to $8,003.85 in tax. The remaining amount would be taxed at 20.5 per cent, which comes out to $1,361.41.
In total, that employee paid $9,365.26 in federal tax.
In 2024, the first $55,867 would be taxed at 15 per cent ($8,380.05) while the remaining portion would be taxed at 20.5 per cent ($847.26).
In total, that adds up to $9,227.31.
“The difference between the two years is essentially such that the taxpayer would pay less tax under the second tax bracket, rate at 20.5 per cent, and more under the first tax bracket rate, at 15 per cent, because more of their income would apply to the first tax bracket than the second tax bracket,” she said.
WHY TAX BRACKETS CHANGE
“Federal tax brackets are indexed to inflation every year,” said Benham.
“As prices increase, the tax brackets also increase to acknowledge changes in the cost of living,” she said. “Each province also has its own set of provincial tax brackets, and most index them for inflation.”
Indexing them typically reduces the amount of taxes people must pay and prevents them from paying a disproportionately high tax rate based on their income.
BASIC PERSONAL AMOUNT FOR 2024
Canadians can take advantage of various tax credits, deductions and benefits to reduce their total taxes.
To decrease their federal income tax burden, Canadians can claim a tax credit called a basic personal amount.
Federal income tax rates only apply after the individual has earned more than the basic personal amount.
The maximum basic personal amount rose to $15,705 in 2024, capped at $14,156 for individuals with net income above $173,205. Last year, it was $15,000, capped at $13,521 for individuals with net income above $165,430.
With files from CTVNews.ca Contributor Christopher Liew
LONGUEUIL, Que. – People in a part of Longueuil, Que., were being asked to stay indoors with their doors and windows closed on Thursday morning after a train derailed, spilling an unknown quantity of hydrogen peroxide.
Police from the city just east of Montreal said it didn’t appear anyone was hurt, although a CN rail official told a news conference that three employees had been taken to hospital as a precautionary measure.
The derailment happened at around 9 a.m. in the LeMoyne area, near the intersection of St-Louis and St-Georges streets. Mathieu Gaudreault, a spokesman for CN rail, said about eight cars derailed at the Southwark rail facility, including four that toppled over.
“As of this morning, the information we have is it’s hydrogen peroxide that was in the rail car and created the fumes we saw,” he said, adding that there was no risk of fire.
François Boucher, a spokesman for the Longueuil police department, said police were asking people in the area, including students at nearby schools, to stay indoors while experts ensure the air is safe to breathe.
“It is as a preventive measure that we encourage people to really avoid exposing themselves unnecessarily,” he told reporters near the scene.
Police and fire officials were on site, as well as CN railworkers, and a large security perimeter was erected.
Officers were asking people to avoid the sector, and the normally busy Highway 116 was closed in the area. The confinement notice includes everyone within 800 metres of the derailment, officials said, who added that it would be lifted once a team with expertise in dangerous materials has given the green light.
In addition to closing doors and windows, people in the area covered by the notice are asked to close heating, ventilation and air exchange systems, and to stay as far from windows as possible.
Gaudreault said it wasn’t yet clear what caused the derailment. The possibilities include a problem with the track, a problem with a manoeuvre, or a mechanical issue, he said.
This report by The Canadian Press was first published Nov. 14, 2024.
HALIFAX – Nova Scotia’s Liberal party is promising to improve cellphone service and invest in major highways if the party is elected to govern on Nov. 26.
Party leader Zach Churchill says a Liberal government would spend $60 million on building 87 new cellphone towers, which would be in addition to the $66 million the previous Progressive Conservative government committed to similar projects last year.
As well, Churchill confirmed the Liberals want to improve the province’s controlled access highways by adding exits along Highway 104 across the top of the mainland, and building a bypass along Highway 101 near Digby.
Churchill says the Liberals would add $40 million to the province’s $500 million capital budget for highways.
Meanwhile, the leaders of the three major political parties were expected to spend much of today preparing for a televised debate that will be broadcast tonight at 6 p.m. local time.
Churchill will face off against Progressive Conservative Leader Tim Houston and NDP Leader Claudia Chender during a 90-minute debate that will be carried live on CBC TV and streamed online.
This report by The Canadian Press was first published Nov. 14, 2024.
TORONTO – A group of hotel service workers in Toronto is set to hold a rally today outside the Fairmont Royal York to demand salary increases as hotel costs in the city skyrocket during Taylor Swift’s concerts.
Unite Here Local 75, the union representing 8,000 hospitality workers in the Greater Toronto Area, says Royal York employees have not seen a salary increase since 2021, and have been negotiating a new contract with the hotel since 2022.
The rally comes as the megastar begins her series of six sold-out concerts in Toronto, with the last show scheduled for Nov. 23.
During show weekends, some hotel rooms and short-term rentals in Toronto are priced up to 10 times more than other weekends, with some advertised for as much as $2,000 per night.
The union says hotel workers who will be serving Swifties during her Toronto stops are bargaining for raises to keep up with the rising cost of living.
The union represents hospitality workers including food service employees, room attendants and bell persons.
This report by The Canadian Press was first published Nov. 14, 2024.
