Several changes occur on July 1 for vigilant taxpayers and payroll departments:
The Federal TD1 Personal Tax Credit Return has been updated to include the new deduction rates for living in a prescribed northern zone, increased to $8.25 per day (single) and $16.50 per day (living with a dependant). Please see the revised TD1 form to adjust source deductions for persons meeting this criteria.
Provincial Personal Tax Credits. Please note that increased personal tax credits and income levels have been tabled for Alberta and Saskatchewan for the Disability Tax Credit, Caregiver Amount and Amount for infirm dependant over 18. Check out the following link for the revised TD1 forms effective July 1: (AB and SK).
Also, effective July 1, BC and NL have reduced their provincal tax rates. Check out the details at the following links:
With an average refund of $1,400 last year, many Canadians overpay their taxes every month, at the expense of savings in tax deferred vehicles like RRSPs or non-registered accounts. Assuming 4.5% interest rates, this costs Canadians plenty over an average working life of 40 years. Consider the following, calculated on the assumption an average refund of $1,400 is reinvested each year for 40 years: