In Ontario, 2017 brings many big governmental changes that will impact your household’s personal finance.
These changes include increasing energy costs, the elimination of many children’s tax credits, increased rebates for first-time homebuyers and the introduction of the Ontario Student Grant.
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The Cancellation of Tax Credits For Families
With last year’s introduction of the Canadian Child Benefit, the Federal Government helped balance this spending increase by cancelling many tax-credits that targeted families with children.
These cancelled tax credits are; the fitness, arts, education and text book tax credits. These tax credits targeted families that enrolled their children in arts and fitness programs, or had children at qualifying post-secondary educational institutions.
Previously, these non-refundable tax credits would reduce the amount of taxes that a household would have to pay.
Increasing First-Time Homebuyer’s Benefits
The Ontario government are further reducing the amount of land-transfer taxes that first-time homebuyers will need to pay. The refund on the Ontario land-transfer tax is increasing from $2,000 to $4,000. This means that a qualifying household will not need to pay any Ontario land-transfer taxes on any home that is $368,000 or less.
Toronto already offers a similar tax-credit of $3,725 for first-time home-buyers, which allows them to not pay any Toronto land-transfer taxes on property valued at $400,000 or less. Toronto is the only other city in Ontario that is allowed to charge an extra land-transfer tax.
Qualifications for the Ontario’s land-transfer tax rebates are very strict, and it’s important to review this policy with great care. Restrictions include clauses like; you and any co-borrowers must not have owned a home anywhere else in the world…ever. So be cautious.
Changing Energy Costs
Recently, Ontario enacted a controversial Cap and Trade program to reduce emissions and increase green infrastructure spending. This new policy will lead to higher costs for Ontario consumers. Directly, we will be affected by rising gas, oil and other fossil fuel prices. Indirectly, goods will now be more expensive to produce in Ontario, as energy is a large input, and these increased prices will be partially passed to consumers.
The impact of the policy is still undetermined, but the Provincial Government stated that gas will increase by about 4 cents a litre and heating bills will increase by about $5 a month.
To counter-act some of these increases, the provincial government is eliminating the 8% provincial portion of the HST tax on heating bills. Unfortunately, Hydro fees are also increasing and overall the combined estimated savings will be very minimal and likely around 2% for an average household.
The New Ontario Student Grant
This new provincial grant comes into effect during the 2017/18 school year and has the possibility of making massive financial changes to qualifying households. The details are still murky, but it seems that many households will receive large grants that will cover all, or part of their post-secondary educational costs.
Qualification is based on household income and size. It also depends whether the student is studying full or part-time, and if it’s a qualified educational institution. Time will tell who qualifies, but this new policy will have a very large impact.
- TFSA limits have increased by $5,500.
- Government pensions, EI, disability payments, tax brackets and more will increase by the cost of living.
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