From: canadarevenue.agency@canada.com   
      
   New tax rates and tax-free rule changes for Canadians to watch for in 2016   
   :CRA SOTW   
      
   Find out more about how the revised rules affect your bottom line   
      
   By Craig Wong, The Canadian Press   
   Posted: Dec 20, 2015 3:31 PM ET Last Updated: Dec 20, 2015 3:31 PM ET   
      
   Combined with the new lower tax rate for income between $45,282 and $90,563,   
   even those whose income isn't in the top one per cent should take a look at   
   their finances to ensure they're on track.   
      
   Peter Bowen, vice-president of tax and retirement research and solutions at   
   Fidelity Investments, says for many people this might be the most important   
   tax planning season ever.   
      
   "With the changes just implemented both to tax rates and TFSAs, everybody   
   needs to take care to make sure their tax planning is right for their own   
   situation," he said. "We always encourage people to get financial advice, but   
   with these changes in place,    
   it is more important than ever."   
      
      
   Planning is more complex   
      
   What you need to do depends on your tax bracket -- and with the wider range of   
   brackets now, that means planning is more complex.   
      
   For those in the bracket that is seeing the rate cut, Bowen says to be sure to   
   claim the deduction against your 2015 income to maximize its value if you're   
   planning on making an RRSP contribution. However, those who make more than   
   $200,000 may want to    
   delay claiming their RRSP contributions until 2016 due to the higher rate set   
   to take effect.   
      
   EY tax partner David Steinberg says those making more than $200,000 may also   
   want to look to maximize their 2015 income by crystallizing any capital gains   
   or taking any bonuses or deferred income that may be due before the new higher   
   tax rate kicks in.   
   "I think you're going to see a lot of people managing taxable income," he said.   
      
      
   Bowen also advises Canadians to carefully consider their future financial   
   needs when weighing TFSA and RRSP contributions.   
      
   How much will you be making throughout your career, what stage are you at in   
   your career and where will you be in retirement? Those are all matters to   
   ponder, he said.   
      
   "These are the questions that people need to be prepared to at least think   
   about because then that decision of using an RRSP or using a TFSA becomes more   
   important," Bowen said.   
      
   RRSP vs. TFSA   
      
      
   The benefit of an RRSP is that you deduct contributions today and defer taxes   
   until your retirement, when you will likely be earning less and may be in a   
   lower tax bracket.   
   In contrast, TFSA contributions don't generate a tax deduction, but any   
   investment income you earn with the money isn't taxed. So, if you think you're   
   going to be in the same or higher tax bracket, putting money into a TFSA might   
   make more sense.   
      
   Bowen noted it isn't just high-income earners who will be hurt by the lower   
   TFSA limits. Retirees looking to shelter a portion of their nest egg from tax   
   will also be affected by the lower contribution limit even though they may   
   fall into the low-income    
   category.   
      
   "They don't have to be wealthy to benefit from TFSAs," he said.   
      
   The tax changes and TFSA rollback were part of the Liberal campaign platform   
   during the federal election.   
      
      
   More changes to come   
      
   The cut to the second tax bracket will save Canadians making less than   
   $200,000 up to $679 per person.   
      
   In addition to the rate changes, the Liberals ended the controversial   
   income-splitting scheme for families put in place by the Conservatives.   
   And more changes are expected.   
      
   The Liberals have promised a child benefit program to replace the universal   
   child care benefit starting in July 2016.   
      
   (c) The Canadian Press, 2015    
       
      
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