Dorward & Company talks tax changes on the horizon
Prepare for this year's taxes
The newest changes to federal taxes are set to “level the playing field” between high and low-income Canadians this year, according to Stephen Johnson, Chartered Professional Accountant with Dorward & Company Chartered Accountants LLP.
Stephen highlights a few changes that will likely impact small business owners:
- Corporate tax rate decreases: In year’s past, the combined rate for Provincial and Federal corporate tax was 14%. Now it’s been reduced to 12%, making Canada’s combined tax rate the lowest overall in the G7. “It’s good for businesses,” Stephen says. “It incentivises leaving money in the corporation due to the lower tax rate and allow for financial growth.”
- CRA cracking down on income splitting: Also referred to as ‘income sprinkling,’ where high-income owners of private corporations distribute their earnings to other family members to reduce taxes. The Federal Government has disallowed this practice unless the family member is under 18 or is actively involved in the business.
- Canada Child Benefit (CCB): Created by lumping together the child fitness and arts credits, the CCB provides tax-free income to parents with children under 18 years of age. Before now, it was a flat rate per child. For 2018, it will be based on household income, with slightly more funds going towards low-income parents to help reduce child poverty rates.
To help prepare for the impending tax season, Stephen suggests talking to a financial advisor and abiding by the “rule of thumb” of putting away 20% of your monthly earnings to reduce the blow of taxes.
“The wage gap is definitely real, and I hope that there is some state of happiness we can come to if we start trying to help those people in lower tax brackets,” Stephen says.
“It still doesn’t make it easier for small business owners. Running a business isn’t for the faint of heart.”
- Read the Canadian Taxpayer Federation’s annual tax changes report for the full scope.
- Click here to learn more about Dorward & Company’s services.
- Get in touch with the Calgary office at 403-719-7985.
- Connect with Stephen on LinkedIn.
- Check out Dorward & Company’s Sustainability Profile.