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Lower taxes, new RRSP rules and digital news tax credit among 2020 changes

Last Updated Dec 31, 2019 at 8:35 am PST

Canadian $100 bills are counted in Toronto, Feb. 2, 2016. The registered retirement savings plan (RRSP) is one of the best-known tax shelters available to Canadians, particularly in the weeks before the annual contribution deadline, which is March 1 this year. But financial experts say a tax free savings account (TFSA) is often a better choice over the long run. THE CANADIAN PRESS/Graeme Roy

OTTAWA — The basic amount most Canadians can earn tax-free is going up on Jan. 1, resulting in slightly lower federal income taxes.

The tax cut is one federal measure taking effect for the new year, along with other changes that will impact recently separated individuals who want to buy a home, retired Canadians and people who buy digital news subscriptions.

The increase in the basic personal amount was promised by the Liberals during the federal election campaign and is being phased in over four years until it reaches $15,000 in 2023.

For this year, the Canadian Taxpayers Federation says the result will be a federal income tax savings of $113 in Quebec and $138 in the rest of Canada, with the amounts being clawed back from anyone earning more than $150,473 during the year.

Also effective Jan. 1, Canadians experiencing a breakdown in their marriage or common-law partnership can qualify to use up to $35,000 from their registered retirement savings plan to build or buy a home without paying tax on the withdrawal.

As well, Canadians who pay up to $500 for digital news subscriptions can apply for a $75 tax credit.

This report by The Canadian Press was first published Dec. 31, 2019.

The Canadian Press