The Proposed New BPA: It’s Complicated
The new government has pledged changes to the Basic Personal Amount (BPA), but in doing so, has introduced significant complexity into the calculations, especially for higher-income earners. These changes are scheduled to begin in 2020 and targets taxpayers with incomes below $150,605 and $214,557 as explained below:
|
YEAR
|
BASELINE BPA
|
NEW BPA – Income below $150,605
|
NEW BPA – Income below $214,557
|
|
2020
|
$12,309
|
$13,229
|
$12,769
|
|
2021
|
$12,567
|
$13,808
|
$13,188
|
|
2022
|
$12,852
|
$14,298
|
$13,625
|
|
2023
|
$13,092
|
$15,000
|
$14,046
|
How it will work. For individuals with income below the first income threshold, the new BPA is equal to the third column above for each calendar year. For individuals with income greater than the first threshold, but less than the second, the new BPA in column four above is half the difference between the amounts in the third column and the baseline BPA.
All BPAs (baseline and for both income thresholds) are indexed to inflation for 2024 and beyond. The PBO estimates the cost of these changes to be as follows:
|
YEAR
|
2019-2020
|
2020-2021
|
2021-2022
|
2022-2023
|
2023-2024
|
2024-2025
|
2025-2026
|
2026-2027
|
2027-2028
|
2028-2029
|
|
$millions Total
|
662
|
2,890
|
3,861
|
4,855
|
5,664
|
5,849
|
6,015
|
6,201
|
6,391
|
6,585
|
Note: The amounts for spouse or common-law partner and dependent will not be changed from the current format, which uses the baseline BPA.
These changes appear to add a new “clawback zone” and with it some higher marginal tax rates for incomes over $150,605.
Additional educational resources: Interested in learning more about personal tax issues? Take our online courses from the DFA-Tax Services Specialist™ designation program. Or, come to one of our CE Summit workshops for an in-person learning experience.
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