Ottawa is saying a whole host of federal tax changes come into effect in the New Year. Some will hit your paycheque, others your bills — and if you're a small business owner, there are a couple of changes coming for which you've likely been preparing for months.
Starting in January, Canadians' Canada Pension Plan (CPP) contributions increase from 4.95% to 5.1% on earnings between $3,500 and $57,400. It's the first of five years of graduated increases running until 2023, when the rate will reach 5.95%.
The increases are going to pay for what eventually will be an enhanced CPP. The Quebec Pension Plan will see similar changes.
Partially offsetting that increased CPP contribution on your paycheque will be a drop in Employment Insurance (EI) premiums, from $1.66 to $1.62 per $100 of insurable earnings.
2019 also will be the first tax year when low income workers can qualify for a more generous Canada Workers Benefit, a program intended to help the working poor stay employed.
The maximum benefit will increase by between $300 and $400, based on whether the applicant is single or part of a family. That brings the maximum benefits to $1,355 for a single person or $2,335 for a single parent or couple, depending on personal incomes.
However, as 2019 is the eligibility year, low-income workers will have to wait until 2020 to get the boosted benefit.
Experts say more than half of Canadians who live in poverty are working.
