The Year-end tax planner is designed primarily for individuals who have accumulated some wealth or own their own businesses (large or small). It includes nine year-end tax planning checklists and several tables of useful information.
Taxation of passive investment income earned by private corporations – small business deduction limit is phased out for a Canadian-controlled private corporation (CCPC) that (together with associated CCPCs) earns between $50,000 and $150,000 of passive investment income in the previous taxation year, for taxation years beginning after 2018; all provinces and territories, except for New Brunswick and Ontario, have paralleled this federal measure.
Small business corporate income tax rate – decreased from 10% to 9% on January 1, 2019
Personal income tax rates – rates on non-eligible dividends increased in 2019
Tax-free savings account (TFSA) – annual contribution limit increased from $5,500 to $6,000 for 2019
Home buyers’ plan – withdrawal limit increased from $25,000 to $35,000 for withdrawals after March 19, 2019
Employee stock options – limits to restrict beneficial treatment of stock options proposed
Scientific research & experimental development (SR&ED) – calculation of annual expenditure limit changed, for taxation years ending after March 18, 2019
General and M&P corporate rates
Small business corporate rates and thresholds
All jurisdictions – federal rate decreased in 2019, causing combined federal and provincial/territorial rates to decline
Manitoba – threshold increased from $450,000 to $500,000 on January 1, 2019
Nunavut – rate decreased from 4% to 3% on July 1, 2019 (draft legislation; not yet enacted)
Prince Edward Island – rate decreased from 4% to 3.5% on January 1, 2019 and will further decrease to 3% on January 1, 2020
Quebec – regular rate decreased from 7% to 6% on January 1, 2019, and will gradually decrease to 4% by January 1, 2021; lowest small business CCPC M&P rate remains 4%
Personal income tax rates
All jurisdictions – federal rates on non-eligible dividends increased in 2019, causing combined federal and provincial/territorial non-eligible dividend rates to rise
Alberta – rates on eligible dividends increasing in 2021 and 2022
British Columbia – rates on eligible dividends decreased in 2019
Quebec – rates increased for eligible and non-eligible dividends in 2019, and continuing to increase in 2020 (for eligible dividends) and in 2020 and 2021 (for non-eligible dividends)
Alberta SR&ED tax credit – eliminated for eligible expenditures incurred after December 31, 2019
Manitoba provincial sales tax (PST) – rate decreased from 8% to 7% on July 1, 2019
Quebec sales tax (QST) – certain suppliers outside Quebec must register for QST starting in 2019
Working with your PwC adviser is essential when considering the following year-end tax planning tactics. In addition to tax considerations, your financial plan should reflect investment philosophies, sound business practices and motivational goals. Owner-managers should ensure that sufficient funds are retained to meet business objectives; given the uncertainty in the economic environment, cash flow management is especially important.