Year-end tax planner – 2020: Helping individuals and owner-managed businesses save tax

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.

What's new?

Federal

COVID-19 response – wage subsidies (e.g. Canada Emergency Wage Subsidy) and benefits (e.g. Canada Recovery Benefit) introduced; certain payment and filing deadlines extended 

Employee stock options – limits to restrict beneficial treatment of stock options proposed 

Provincial/territorial 

COVID-19 response – various incentives introduced (e.g. B.C. PST rebate on select machinery and equipment); certain filing deadlines extended 

General and M&P corporate rates

  • Alberta – decreased from 11% to 10% on January 1, 2020, and to 8% on July 1, 2020
  • Nova Scotia – decreased from 16% to 14% on April 1, 2020

  • Quebec – decreased from 11.6% to 11.5% on January 1, 2020 

Small business corporate rates

  • Nova Scotia – decreased from 3% to 2.5% on April 1, 2020

  • Ontario – decreased from 3.5% to 3.2% on January 1, 2020

  • Prince Edward Island – decreased from 3.5% to 3% on January 1, 2020, and will further decrease to 2% on January 1, 2021

  • Quebec – regular rate decreased from 6% to 5% on January 1, 2020, and decreasing to 4% on January 1, 2021; small business CCPC M&P rate remains 4%

  • Yukon – non-M&P and M&P rates decreasing to 0% (from 2% and 1.5%, respectively) on January 1, 2021

Personal income tax rates

  • Alberta – rates on eligible dividends increasing in 2021

  • British Columbia – new 20.5% top rate introduced for taxable income exceeding $220,000, starting 2020

  • Ontario – rates on non-eligible dividends increased in 2020

  • Prince Edward Island – rates on non-eligible dividends increasing in 2021

  • Quebec – rates increased for eligible and non-eligible dividends in 2020, and increasing for non-eligible dividends in 2021

  • Yukon – rates on non-eligible dividends increasing in 2021

Research and development (R&D) tax credits 

  • Alberta – eliminated for eligible expenditures incurred after December 31, 2019, but new innovation employment grant that supports R&D for small and medium-sized businesses available starting January 1, 2021 

  • Quebec – expenditure exclusion threshold only applies to the R&D wage tax credit for qualified expenditures incurred for a taxation year beginning after March 10, 2020

  • Yukon – rate for corporations decreasing to 12% for eligible expenditures incurred in taxation years ending after December 31, 2020

Beneficial ownership registries – new (British Columbia, Manitoba, Prince Edward Island) and expected (Nova Scotia, Quebec and Saskatchewan) provincial requirements for privately-held companies to maintain ownership registries

 

Year-end tax planning checklists

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.

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Sabrina Fitzgerald

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Luigi De Rose

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Nadja Ibrahim

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