The first of January brings with it not only a new calendar year, but also changes to various income tax and benefit amounts, most of which are indexed to inflation. Earlier this month, the Canada Revenue Agency announced that the inflation rate that will be used to index the 2017 brackets and amounts is 1.4 per cent. This rate was calculated by taking the percentage change in the average monthly Consumer Price Index (CPI) data as reported by Statistics Canada for the 12-month period ended Sept. 30, 2016 relative to the average CPI for the 12-month period ended on Sept. 30, 2015.
Increases to the tax bracket thresholds and various amounts relating to non-refundable credits take effect on Jan. 1, 2017. Increases in amounts for certain benefits, such as the GST/HST credit, however, only take effect on July 1, 2017. This coincides with the beginning of the program year for these benefit payments, which are income-tested and based on your prior year’s net income as reported on your 2016 tax return, which most Canadians will have filed (and the CRA will have assessed) by July 1, 2017.
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