Proposed Changes to Federal Basic Personal Amount
Update as of February 14, 2020:
Proposed Changes to Federal Basic Personal Amount (FBPA)
As a result of a December 9 announcement by the Federal Government, the Canada Revenue Agency (CRA) has released updated versions of the following:
The CRA has provided administrative relief as to the timing of implementation of these proposed changes into payroll systems.
The Canadian Payroll Association has assessed these proposed changes to the Federal Basic Personal Amount as being overly complex because of the dynamic formula component. The late timing of the announcement is also an issue, particularly because employers, payroll service providers, and software developers are currently focused on meeting federal and provincial year-end requirements.
The Association is advocating that the proposed administrative changes be reviewed by the office of the Minister of National Revenue.
The FBPA changes are still only proposed, and have been challenged in the House of Commons.
It is the Canadian Payroll Association’s recommendation that no further implementation or payroll system development related to these administrative changes take place until the proposed legislation receives Royal Assent and the CRA conducts a thorough review. Should any employees inquire about the timing of the proposed changes, our analysis has concluded that the actual at source income tax variances do not represent a significant monetary impact per pay period. As is the case with any partial year changes, where applicable, employees will receive their complete eligible tax credit when filing their personal income tax return.
The Canadian Payroll Association will continue to update members on this issue, including once a determination has been made on how to best administer the federal basic amount.