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March 22, 2017
With two new parties leading the federal and provincial government, there have been drastic tax reforms. Dorward & Company LLP Chartered Accountants highlights what to watch for ahead of this year’s tax season.
For instance, you now have to declare the sale of your home. “The Government of Canada is trying to crack down on people who purchase and flip homes as a job, or have more than one residence. This is their way to attempt to accumulate the information,” explains Steven Hudson, manager of Dorward & Company’s Calgary firm.
The Federal government has made several changes to tax credits for families and children. They’ve eliminated income splitting, where you could save $2,000 in tax by shifting income from the higher income earner to the lower income earner. The Children’s Fitness and Arts Tax Credit was cut down to $500, and will be eliminated in the next tax season. The Education and Textbook Tax Credit is also being discontinued, and the annual contribution limit for Tax-free Savings Accounts was lowered from $10,000 to $5,500.
“It’s not just that they’re taking away, but they are replacing those tax credits with different programs,” says Stephen Johnson, Chartered Professional Accountant at Dorward & Company. The Liberal Government will be rolling the Child Tax Benefit program and the Children’s Fitness and Arts Tax Credit into one. The new Canada Child Benefit program will be based on income and number of children.
“As tax planners, we’re looking at options to help our clients avoid paying tax at the highest tax rate,” says Stephen. “There’s always the option of contributing to RRSPs. Or, depending on their business, we can help them set up a corporation to defer tax and pay at the corporate tax level, which is much lower.” The corporate small business tax rate in Alberta is 13.5%, compared to the highest personal income tax bracket at 48%.
“We spend a lot of time educating ourselves about the tax changes, what can and can’t be deducted. We want to provide peace of mind to our clients by doing their tax returns.”
The deadline for this year’s personal taxes is May 1, 2017. Stephen and Steve recommend filing your taxes by at least April 15.
Click here to review Dorward & Company Chartered Accountants’ personal tax services to learn more.
Read this article about paying yourself as an employee or a corporation.
Connect with Stephen Johnson on LinkedIn.
Contact Dorward & Company Chartered Accountants at (403) 719-7985 or via email.
Check out Dorward & Company’s Sustainability Profile.
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