Year-end tax planner – 2019: 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?

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

  • Alberta – decreased from 12% to 11% on July 1, 2019, and will decrease by one percentage point on January 1 of each year, until it reaches 8% on January 1, 2022
  • Quebec – decreased from 11.7% to 11.6% on January 1, 2019, and will decrease to 11.5% on January 1, 2020

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

 

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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Saul Plener

National Leader, Private Company Services

Tel: +1 905 418 3471

Daniel Fortin

QC Region

Tel: +1 514 205 5073

Nadja Ibrahim

Calgary Private Company Services Leader, Partner, Tax

Tel: +1 403 509 7538

Sean Wilson

Partner

Tel: +1 604 806 7187

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