We would like to welcome Jainita Desai to our staff as a staff accountant. Jainita is an Okotoks resident and is working towards her CPA designation. Jainita will be working on both corporate and personal files as we head into this busy tax season.
2018 Federal Budget
The budget as introduced by Bill Morneau and the Liberal government on February 27, 2018 was, for the most part, a non-event with little provided corporately for any of my clients and almost nothing for the personal tax regime.
The rules as previously announced in December were quantified and unchanged from those outlined before. Essentially, subject to a few limited exceptions, dividends paid to shareholders must reflect their contribution to the corporate entity. A variety of rules that mirror in a large part the old related employee rules.
The July 18, 21017 proposed draconian measures were backed away from and a much more reasonable basis for taxation of this income was proposed. Essentially, once passive investment income exceeds $50,000 in a year there is a grind on the small business deduction [SBD] until at $150,000 of passive income the SBD is eliminated. This applies across the associated group. To my knowledge, this doesn’t affect any of my current client base.
There are number of new rules which essentially divide the previous refundable tax pools into two pools dependent on how they were derived. How those are refunded will depend on the timing and nature of the dividends paid.
Previously announced – the small business rate will fall to 10% for 2018 and to 9% for 2019. When combined with Alberta’s 2% small business rate we will be down to 11%, a far cry from where we were at 14½% a couple of years ago.
Really not addressed at all in this budget. Unfortunately, many credits have been wiped out for 2017 but that happened in previous budgets and are just coming home to roost now.
While there are other items such as new trust reporting requirement, new rules for reassessments, etc. none will have a significant effect on the majority of my taxpayers.
As always if you have questions give me a call, send an email or come and see me.
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If there is anything we can do for you, please give us a call.
R Brenton Driscoll, CPA, CA
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