When you are weighing your options as to where you would like to migrate taking in consideration tax incentives, Canada is probably not the first country to look at.
A popular immigration destination regardless, it will come as good news that tax rules have been amended, with some attractive new stipulations.
Any citizen or resident in Canada is tax liable from the moment of residence.
It is to be noted that the new tax rules will mainly benefit the low- and mid-income earners, while those with a high income will see a rise in payable tax.
For those earning between $45,282- $90,563, the tax rate on taxable income will be reduced from 22% to 20.5%.
Individuals earning over $200,000 will be taxed 33%.
The changes will go into effect on 1 January, 2016.
Changes to TFSA
What will be interesting for the new immigrant is the changes regarding the tax - free savings account (TFSA) that will go into effect on the same date.
The maximum amount that can be deposit per year onto this account has been set back at $5,500.
The TFSA is an interesting saving option for immigrants, as it does not require previous income in Canada. This is in contrast with the Registered Retirement Saving Plan (RRSP), where a built up of previous income is required in order to create contribution room.
Further, TFSA is a tax-sheltered saving option in the sense that withdrawals are tax-free and do not impact any other benefits and tax credits. However, contributions to TFSAs are not tax-deductible, whereas contributions to the RRSP are.
The changes made are in line with the promises of the newly elected liberal government.
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