Changes for the 2018 Income Tax Year

As always, the federal government has included some income tax changes in 2019, for the 2018 tax year. Most of the changes that have been announced or proposed are related to businesses, with a few changes for individuals.

The small business tax rate is scheduled to be reduced from 10.5% to 10% for 2018, and reduced again to 9% for 2019. Passive income schemes, taxable dividends, securities lending arrangements, repurchase of shares, and at-risk rules for tiered partnerships have all had changes made; for an in-depth look at these changes, it is recommended that you talk to the accounting professionals at Shaw & Associates Chartered Accountants to see how these changes might affect you.

Certain trusts have had additional reporting and filing requirements added. Again, it is recommended that you talk to an income tax professional to see if the income tax changes for trust reporting will affect you.

A few of the changes that affect individuals include:

• The Employment Insurance Caregivers Benefit for taking time off to be a caregiver has been extended to include maternity and sickness benefits.
• Renaming the Working Income Tax Benefit to the Canada Worker’s Benefit has been proposed, and is set to be enhanced starting in 2019. The maximum benefit will be increased to $1,355 for singles, and $2,335 for families.
• The Disability Tax Credit has increased.
• Costs for a service animal for people with severe mental impairments such as post-traumatic stress disorder are proposed to be included under medical expense tax credits.

Interestingly, $90.6 million have been earmarked to be invested by the federal government over the next five years to fight tax avoidance.

Some past changes to tax measures that have been proposed but not implemented have also been addressed. Per Osler.com:

“Budget 2018, in accordance with the government’s customary disclosure of previously announced measures, confirms the government’s intention to proceed with the previously announced tax and related measures, as modified to take into account consultations and deliberations since their release, including the following:

• Measures confirmed in Budget 2016 to expand the scope of the GST/HST joint venture election, which had been promised in previous budget proposals;
• The measure announced in Budget 2016, on information-reporting requirements for dispositions of an interest in a life insurance policy;
• The legislative proposals released on September 16, 2016, relating to technical amendments to the ITA;
• The legislative and regulatory proposals to amend the Excise Tax Act released on September 8, 2017, relating to the GST/HST; and
• Measures released on December 13, 2017 to address income sprinkling.”

For more details on the upcoming changes, look at summaries from Deloitte.com and Macleans. 

Contact Shaw & Associates Chartered Accountants to help you understand the tax laws and how they impact you. One complimentary meeting with us will put you and your business on a more profitable and positive path.