As you get ready to prepare your 2018 taxes and think about the tax year ahead, here are the big changes to personal taxes. Many of them will keep more money in your pocket, so make sure you’re aware of what’s new!
On the new personal tax returns there will be a box asking if you’d like to be an organ donor. Think of all the lives that will be saved! We will include this new option on our personal tax checklist this year and hope we get lots of positive responses.
Expect More Audits
Last year, the CRA audited about 10% of people that filed personal tax returns. Expect the same this year - so keep those receipts!
Do you make sales over your website? If so, we should probably chat as there are some things you should be aware of. Firstly, sales in provinces other than Alberta could be subject to PST/HST. You could be left on the hook for these extra taxes, even if you didn’t charge it to your customers. The second change is that you now need to let the CRA know if you have online sales. This is done on the tax return, so your accountant needs to know too.
Buy Equipment, Save Taxes
As an incentive for Canadian businesses to invest in equipment, for a limited time, the write-off your business will get in the first year is increasing by as much as triple! Equipment purchased after November 21, 2018 will qualify. This could be a good tax planning opportunity, let us know if you want to chat about it. Also be sure to let us know if you have purchased anything during the year that might qualify.
Work In Progress
This change will affect lawyers, medical doctors, accountants, and dentists. You no longer have the choice of whether or not to include your work in progress (WIP) income in your calculation of earned income. This means you will have higher taxable income this year as you are taking-in unbilled time from last tax year, as well as unbilled time from next year. So to help ease the burden, businesses can gradually report their WIP over a 5-year period.
Changes for 2019
This new change is pretty exciting. The rate per km for 2018 is $0.55/km for the first 5000, then $0.49/km over that. Starting in 2019, these rates will go up to $0.58 per km for the first 5,000 km and $0.52 over and above that. This can add up quickly if you drive a lot for work. Learn more about vehicle expenses in our blog on the subject here. Also, check out this mileage tracking app to help document your kms MileIQ.
Changes to CPP
We wrote a whole blog in January outlining the change to CPP starting in 2019. Short story is, CPP rates are going up. Read more here: CPP Enhancement.
EI Working While on Claim
The 2018 budget also proposed to allow EI (Employment Insurance) claimants to keep 50 cents of their EI benefits for every dollar they earn, up to a maximum of 90% of the weekly insurable earnings. This is called Working While On Claim. This will help all those people trying to do cash jobs while on EI.
The 2018 Budget proposed a new Parental Sharing Benefit. The benefit encourages both parents to take time off work to care for the newest members of the household and will become official in June 2019.
For parents who choose the standard parental benefits (55% of earnings for up to 15 weeks of maternity leave and 35 weeks of shared leave): the benefit will increase the total EI parental leave available to both parents from 35 to 40 weeks. Each parent will be required to take a minimum of five of the 40 weeks. Families that opt for extended parental leave (33% of earnings for up to a total of 61 shared weeks) can access up to eight additional weeks, provided each takes at least 8 weeks.
If you have questions about any of these changes or how you can capitalize on them, please get in touch! Make this a stress-free tax season and hire us to do your corporate and personal taxes this year.
Read more about Personal Tax topics that may be helpful to you and your small business.
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