There are three certainties in life: death, taxes and change. That’s why taxpayers and their advisors must take note when provinces like Alberta raise their taxes for the first time since 1987.
And with this latest news, we are likely seeing the end of the lowest taxed era in Canada since the turn of this century.
What has happened in Alberta is that the flat tax of 10% is ending in 2016 in favor of two higher tax brackets for those who earn over $100,000 in taxable income. A temporary tax will also be instituted over three years starting in 2017 for those who earn over $250,000.
In addition, however, the charitable donation tax credit will decrease for amounts over $200, from 21% to 12.75% making it less advantageous to give with tax relief than in the past. Another important change hits further down the income brackets.
The upper middle class will pay more, sooner, for their health care. The Health Care Contribution Levy kicks in on July 1, 2015 and is deducted through payroll remittances, or prepaid through quarterly tax remittances. It will form part of the income tax filings for 2015.
But it’s in the fine print that didn’t make the headlines that further tax increases in other areas of the budget really shine. In some areas, Albertans are going to be in for a real surprise. For example, there is a new Insurance premiums tax increase of 1% starting on April 1, 2016. This amount will be received by insurers and remitted: 3% on life, sickness and health, 4% on other insurance policies. While it’s the first increase of its kind in 25 years, advisors should take note.
It’s going to be important to slow down, too. Traffic fines are going up 35% across the board. Your speeding tickets are going start cutting into the shoe budget pretty quickly, going up to $474 at the maximum level. If you run a red light, that’s now going to cost $388 and if you fail to stop at a stoplight – $233.
But it’s cottage owners whose properties are on cottage lot leases that will be hit perhaps the hardest. Fees are going up from $600 – $700 a year to between $1200 and $1400 a year.
Despite the fact that a New Alberta Working Family Supplement is ear-marked for July of 2016, families who have made gains under the Family Tax Cuts and enhanced Universal Child Care Benefit may want to think carefully about spending the money they’ll receive by July 2015 too quickly. Looks like in Alberta, at least, you may be forking your vacation windfall money from the federal government to the province in their various new fees and levies.