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Year-end tax planner – 2021: 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?

COVID-19 response – emergency business supports (e.g. wage and rent subsidies and lockdown support programs) extended, but made more targeted after October 23, 2021; temporary hiring subsidy on eligible incremental remuneration introduced

Employee stock options – limits to restrict beneficial treatment of stock options, effective for options granted after June 30, 2021; the new rules do not apply to options granted by Canadian-controlled private corporations (CCPCs), or by corporations or mutual funds with gross revenue of $500 million or less

Intergenerational transfers – new rules intended to provide tax relief for intergenerational transfers of small businesses and family farm and fishing corporations enacted; legislative amendments (subject to public consultation) are expected to be proposed to prevent unintended tax consequences 

Mandatory disclosure rules – enhanced rules for reportable transactions and new rules to report “notifiable transactions” and “uncertain tax treatments” proposed (subject to public consultation; expected to apply to taxation years that begin, and transactions entered into, after 2021) 

Immediate expensing of capital property of CCPCs – up to $1.5 million per taxation year for eligible property acquired by CCPCs after April 18, 2021 proposed 

Zero-emission technology manufacturers’ income – temporary reduction of corporate income tax rates (general and small business) on this income proposed, starting in 2022 

 

Small business corporate rates 

  • Northwest Territories – decreased from 4% to 2% on January 1, 2021
  • Prince Edward Island – decreased from 3% to 2% on January 1, 2021, and will further decrease to 1% on January 1, 2022
  • Quebec – regular CCPC rate decreased from 5% to 4% on January 1, 2021; small business CCPC regular and M&P rates decreased from 4% to 3.2% on March 26, 2021
  • Saskatchewan – decreased from 2% to 0% on October 1, 2020, and then increasing to 1% on July 1, 2022 and 2% on July 1, 2023
  • Yukon – non-M&P and M&P rates decreased to 0% (from 2% and 1.5%, respectively) on January 1, 2021

Personal income tax rates 

  • Alberta – increased for eligible dividends in 2021
  • New Brunswick – lowest tax rate decreased from 9.68% to 9.4% in 2021
  • Newfoundland and Labrador – increasing for taxable incomes over $135,973, starting in 2022, and changing for eligible and non-eligible dividends in 2022
  • Prince Edward Island – increased for non-eligible dividends in 2021, and further increasing in 2022
  • Quebec – increased for non-eligible dividends in 2021, and further increasing in 2022
  • Saskatchewan – increased for non-eligible dividends in 2021, and then decreasing gradually from 2022 to 2024
  • Yukon – increased for non-eligible dividends in 2021

Beneficial ownership registries – provincial requirements for privately-held companies to maintain ownership registries proposed in Newfoundland and Labrador and Ontario; already implemented or planned in other provinces

 

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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Contact us

Sabrina Fitzgerald

Sabrina Fitzgerald

National Leader for Private Clients

Tel: +1 613 755 5904

Luigi De Rose

Luigi De Rose

Private Tax Markets Leader

Tel: +1 905 418 3421

Nadja Ibrahim

Nadja Ibrahim

Calgary Private Partner, Tax

Tel: +1 403 509 7538

Jean-François Thuot

Jean-François Thuot

Partner

Tel: +1 514 205 5272

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