2015 TAX NEWS RELEASE
On December 7, 2015, a Notice of Ways and Means motion was tabled in the House of Commons by
the Federal Finance Minister, Bill Moreau, which confirmed the Liberal government’s intention to make
some tax changes that will take effect on January 1, 2016. Among the changes proposed is the
introduction of a new top personal income tax rate of 33% for taxable income greater than $200,000.
The previous top personal tax rate was 29%. In addition, the tax rate on taxable income greater than
$45,282 and less than or equal to $90,563 will be decreased to 20.5% from 22%.
The federal tax bracket thresholds and rates that will apply in 2016 once these changes become law are
set out in the table below.
Federal Tax Bracket Thresholds and Tax Rates
Federal Taxable Income Thresholds
Federal Tax Rates
Over $0 to $45,282
15%
Over $45,282 to $90,563
20.5%
Over $90,563 to $140,388
26%
Over $140,388 to $200,000
29%
Over $200,000
33%
For the various types of income, the table below shows a comparison of the personal top marginal
combined Federal and Quebec tax rates for 2015 and those that will apply in 2016 as a result of the
changes announced on December 7, 2015.
Income Type
2015
2016
Salary
Capital gains
Eligible dividends
Non-eligible dividends
49.97%
24.99%
35.22%
39.78%
53.31%
26.65%
39.83%
44.23%
Other changes announced relating to individuals include:

Effective January 1, 2016, the contribution room allocated each year to a qualifying individual for a
tax-free savings account (TSFA) will be returned to its original level of $5,000 indexed to inflation
each year after 2009 and rounded to the nearest $500. Accordingly the individual’s TFSA dollar
limit will be $5,500 for 2016. The limit for 2015 is $10,000;

The federal tax credit to individuals for gifts made to registered charities and certain other qualified
donees will change. Ignoring the impact of the Quebec abatement, currently the tax credit is
calculated as 15% of the first $200 of such gifts and 29% of gifts above that amount. A new tax
credit rate will apply of 33% for gifts in excess of $200 to the extent that an individual has income
that is subject to the new 33% tax rate. The change will apply to gifts made after 2015. Gifts made
in 2015 and previous years, but claimed in 2016 or a later year, will not be eligible for the new
33% tax credit rate; and
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2015 TAX NEWS RELEASE

Federal tax at a rate of 33% will apply on an individual’s split income, increasing from the current
rate in 2015 of 29%. This tax is sometimes referred to as the Kiddie Tax which is a tax on split
income that applies the highest marginal tax rate to such income paid or payable to a minor.
Changes announced relating to investment income in Corporations:

The tax rate for a CCPC generating investment income and taxable in Quebec will increase to
50.57%;

The refundable tax on a Canadian-controlled private corporation’s (CCPC’s) investment income will
increase from 6 2/3% to 10 2/3% applicable to taxation years that end after 2015. For taxation years
beginning before 2016, the rate increase will be prorated according to the number of days in the
taxation year that are after 2015;

The dividend refund rate that applies to private corporations will increase from 33 1/3% to 38 1/3%
applicable for taxation years that end after 2015. For taxation years beginning before 2016, the
increase in the dividend refund rate will be prorated according to the number of days in the taxation
year that are after 2015;

The calculation of the refundable dividend tax on hand (RDTOH) will be amended to increase the
percentage of investment income of a CCPC that can be included in the corporation’s RDTOH and
to adjust the amount of foreign investment income that can be included in the corporation’s
RDTOH; and

The Part IV tax that applies on assessable dividends received in a taxation year by private
corporations or subject corporations from an unconnected dividend payer will increase from
33 1/3% to 38 1/3%. This change will apply to taxation years that end after 2015. For such taxation
years beginning before 2016, assessable dividends are taxed at 33 1/3% if they are received before
2016, and at 38 1/3% if received after 2015.
In addition, the percentage of unused non-capital losses and farm losses that may reduce Part IV tax
is also increased from 33 1/3% to 38 1/3 %. This change applies to taxation years that end after
2015. For such taxation years that begin before 2016, losses applied to reduce Part IV tax are used
first to offset assessable dividends that are subject to the higher 38 1/3% rate.
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2015 TAX NEWS RELEASE
Change announced relating to trusts:

Generally a trust (other than a graduated rate estate or qualified disability trust) will pay a flat federal
rate of tax of 33% for the 2016 and subsequent taxation years. The current federal flat rate of tax in
2015 is 29%, but generally the 29% rate of tax does not apply to testamentary trusts and certain
grandfathered trusts, as such trusts are subject to federal tax at graduated rates.
Finally, in a Finance New Release dated December 7, 2015, it was announced that a new Canada Child
Benefit will be created and payments would begin in July 2016. The details of the proposal will be
introduced in the Federal budget. The release also announced the Federal government’s intention to
introduce changes to repeal income splitting for families with children (not pension income splitting) for
the 2016 and subsequent taxation years.
For more information or to discuss how these changes may affect you, kindly contact your SLF advisor.
The information contained in this release is intended solely to provide general guidance on matters of interest for the personal use of the
reader, who accepts full responsibility for its use. The information in this document is provided with the understanding that the authors
and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice or services. As such it should not
be used as a substitute for consultation with your Schwartz Levitsky Feldman S.E.N.C.R.L/s.r.l/LLP advisor.
Schwartz Levitsky Feldman
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