Building on the success of the 2015 middle class tax cut that lowered taxes for more than nine million Canadians, the Government of Canada is moving forward with a proposal that would put more money in the pockets of Canadians.
Finance Minister Bill Morneau tabled in the House of Commons on December 9 a Notice of Ways and Means Motion that proposes to amend the Income Tax Act to lower taxes for the middle class, and people working hard to join the middle class, by increasing the Basic Personal Amount (BPA) to $15,000 by 2023.
The enhanced BPA – along with past Government actions like the Canada Child Benefit, more help for students, and more generous seniors’ benefits – would help to make life more affordable for Canadians.
It would mean that middle-class Canadians, and people working hard to join the middle class, would pay no federal taxes on the first $15,000 they earn. This increase would cut taxes for close to 20 million Canadians, and would be phased in over four years, starting in 2020.
When fully implemented in 2023, single individuals would save close to $300 in taxes every year, and families, including those led by a single parent, would save nearly $600 every year. It would mean that nearly 1.1 million more Canadians would no longer pay federal income tax at all.
To ensure that this tax relief goes to the people who need help most, the Government would phase out the benefits of the increased BPA for wealthy individuals.
The Government also proposes to increase two related amounts, the Spouse or Common-Law Partner Amount and the Eligible Dependant Credit, to $15,000 by 2023.
The proposed increases in the BPA would mean lower taxes for close to 20 million Canadians.
By 2023, single individuals would save close to $300 in taxes each year, while families—including those led by a single parent—would save nearly $600 in taxes each year.
Nearly 1.1 million more Canadians would no longer pay tax in 2023, and the wealthiest Canadians—the top 1 per cent—would not benefit from this proposed increase.
“We’ve seen what can happen when we invest in Canadians—they take that help, combine it with their own hard work, and the result is a strong and growing economy with more than a million new jobs and record-low unemployment and poverty, in just four years,” said Bill Morneau, Minister of Finance. “Today, we’re moving forward with more help for the middle class and people working hard to join it, because we know that when the middle class does well, everyone benefits.”
“Even though our economy is doing well, we know that people in the middle class—and people who are working hard to join the middle class—still find it challenging to make ends meet, because of the rising cost of living,” said Mona Fortier, Minister of Middle Class Prosperity and Associate Minister of Finance. “Today’s announcement would help people to keep more of what they earn, and help make life more affordable for more Canadians.”