tax-planning-small-business-calgary

On February 27, 2018 the Honourable Bill Morneau, Minister of Finance, presented the 2018 Federal Budget, Equality + Growth: A Strong Middle Class, to the House of Commons.

 

The Government’s fiscal position includes a projected deficit in 2017-2018 of $19.4 billion, and projected deficits in the coming years as follows: 2018-2019 of $18.1 billion, 2019-2020 of $17.5 billion, 2020-2021 of $16.9 billion, 2021-2022 of $13.8 billion and 2022-2023 of $12.3 billion.

From Focus LLP, CPA your Calgary Tax Accountants, in collaboration with Video Tax News Inc., we have provided a summary of the major budget changes over the following blogs:


PERSONAL INCOME TAX CHANGES:

Canada Workers Benefit

Budget 2018 proposes to rename the Working Income Tax Benefit to the Canada Workers Benefit. The amount of the benefit will be equal to 26 percent of each dollar of earned income in excess of $3,000 to a maximum benefit of $1,355 for single individuals without dependants and $2,335 for families (couples and single parents). These amounts are increased from the prior maximum amounts of $1,192 and $2,165, respectively.

The Benefit will be reduced by 12 percent of adjusted net income in excess of $12,820 for single individuals without dependants and $17,025 for families. Previously, the reduction rate was 14 percent. Each province may arrange variances from these amounts.

Ability to access the Benefit for those that have filed returns, but not claimed the Benefit, will also be improved.

This measure will apply to the 2019 and subsequent taxation years. Indexation of amounts relating to the Canada Workers Benefit will continue to apply after the 2019 taxation year.

 

Medical Expense Tax Credit – Eligible Expenditures

Budget 2018 proposes to expand the medical expense tax credit to recognize such expenses where they are incurred in respect of an animal specially trained to perform tasks for a patient with a severe mental impairment in order to assist them in coping with their impairment (e.g., a psychiatric service dog trained to assist with post-traumatic stress disorder).

For example, these tasks may include guiding a disoriented patient, searching the home of a patient with severe anxiety before they enter and applying compression to a patient experiencing night terrors. Expenses will not be eligible if they are in respect of an animal that provides comfort or emotional support but that has not been specially trained to perform tasks as described above.

This measure will apply in respect of eligible expenses incurred after 2017.

 

Registered Disability Savings Plan (RDSP) – Qualifying Plan Holders

Where the adult individual does not have a legal representative in place, a temporary federal measure exists to allow a qualifying family member (i.e., a parent, spouse or common-law partner) to be the plan holder of the individual’s RDSP.

Previously legislated to expire at the end of 2018, Budget 2018 proposes to extend the temporary measure by five years, to the end of 2023. A qualifying family member who becomes a plan holder before the end of 2023 could remain the plan holder after 2023.

 

Mineral Exploration Tax Credit for Flow-Through Investors

The Government proposes to extend eligibility for the mineral exploration tax credit for an additional year, to flow-through share agreements entered into on or before March 31, 2019. Under the existing “look-back” rule, funds raised in one calendar year with the benefit of the credit can be spent on eligible exploration up to the end of the following calendar year. Therefore, for example, funds raised with the credit during the first three months of 2019 can support eligible exploration until the end of 2020.

 

Child Benefits – Foreign Born Status Indians

Under the Canada Child Benefit, as announced in Budget 2016, foreign-born status Indians residing legally in Canada who are neither Canadian citizens nor permanent residents are eligible for the Benefit, where all other eligibility requirements are met. However, these individuals were not eligible under the previous system of child benefits.

Budget 2018 proposes that such individuals be made retroactively eligible for the Canada Child Tax Benefit, the National Child Benefit supplement and the Universal Child Care Benefit, where all other eligibility requirements are met.

This amendment applies from the 2005 taxation year to June 30, 2016.

 DISCLAIMER:

The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional.

No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.