Transcript: Tax Changes for 2020

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[Tax Changes for 2020]

[Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Financial Planning and Advice]

Here we are: 2020, a brand new tax year. Now there's not a lot of tax changes for 2020, but I'll mention a few of them that you might want to know about. Probably the most important one for most Canadians is changes to the federal basic personal amount. This is the basic amount of income that every Canadian can receive without paying any tax at all. Now, the existing federal basic personal amount for 2020 was scheduled to be $12,298.

[2020 federal basic personal amount was scheduled to be $12,298]

That has been increased for 2020 to $13,229.

[This has been increased to $13,229]

So you can actually earn a bit more income without paying any tax. In fact, that will eventually go up to $15,000 by the year 2023. However, this increase is not for everyone.

[Federal basic personal amount: Proposed increases
 

¹ Based on Department of Finance Canada projections for indexation for 2021 to 2023 period.]

The basic personal amount will be reduced if you have income over $150,473, which is the second highest tax bracket for 2020. And in fact, this additional increase will be completely eliminated when your taxable income is over $214,368 in 2020.

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[New 2020 tax credits]

In addition, we have 2 brand new tax credits for 2020. The first is the new Canada Training Credit.

[New tax credit #1: The Canada Training Credit]

It allows you to accumulate amounts in a notional account that's tracked by the CRA. $250 will be added to this account for each year that you're a Canadian resident, age 25 to 65, and have employment or self-employment income between about $10,000 and $150,000 a year.

[NEW! Canada Training Credit

$250 added to CTC account each year someone is:

• A resident of Canada
• Age 25 to 65
• Employment/self-employment income between $10,000 and ~$150,000 (top of third tax credit)]

Then what you're able to do starting in 2020 is claim the Canada Training Credit equal to the lesser of 50% of your eligible tuition and the balance in that notional account. This is a refundable credit, meaning that you could get money back on your tax return.

[NEW! Canada Training Credit

Claim CTC equal to lesser of:

- 50% of “eligible tuition” and

- Notional account balance

Credit is refundable]

And then finally, we have the new tax credit for digital news subscriptions.

[New tax credit #2: Digital news subscriptions]

You get a 15% nonrefundable credit for amounts that you pay for eligible digital new subscriptions to a maximum of $500. So at 15%, that means up to a $75 credit. If you've got a combined digital and newsprint subscription, you can only claim the credit for the cost of the standalone digital subscriptions. This is a temporary credit available for 2020. It goes on to the year 2024 — so in total, 5 years.

[Tax credit for digital subscriptions

15% non-refundable tax credit

• Amounts paid for eligible digital news subscriptions
• Annual maximum $500 in costs

- Annual maximum credit of $75

• Combined digital and newsprint subscriptions

- Limited to cost of standalone digital subscription

• Temporary

- For amounts paid after 2019 and before 2025]

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[CIBC financial advisors provide general information on certain tax, investment and estate planning matters; they do not provide tax, accounting or legal advice. Please consult your personal tax advisor, accountant, licensed insurance professional and qualified legal advisor to obtain specialized advice tailored to your needs.

This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change. ^®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.]