The 2023 budget’s tightening of the alternative minimum tax scheme will net $2.95-billion more from roughly 32,000 Canadians over the next five years
The government plans to tighten up its alternative minimum tax scheme, which it says will squeeze $2.95-billion more over the next five years combined from roughly 32,000 Canadians.
The regime allows fewer deductions, exemptions and tax credits compared with the regular system, levying a flat 15-per-cent tax while offering a $40,000 exemption. The budget states the government will raise the AMT rate to 20.5 per cent and that individuals would pay the higher amount of the AMT calculation or what they would pay through the regular tax system. Any extra tax paid under AMT can be carried forward for seven years and credited against regular taxes.But the government is also giving a break to most of the people who pay AMT.
A slew of deductions will also be disallowed for AMT claimants, including expenses for employment, moving and child care, deductions for workers’ compensation or social assistance or Guaranteed Income Supplement and Allowance payments, and interest and carrying charges incurred to earn property income. The government will cut to 50 per cent non-refundable tax credits that can be applied to reduce AMT payable.
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