Federal Tax Change

Are you aware of the tax changes that have and are taking place? There is the increase in CPP contributions and the Carbon Tax but there are also other changes directed at small businesses.

 

As of January 1, business owners can generate up to $50,000 in passive income before they start to lose access to the advantageous small business tax rate. Small businesses pay a relatively low tax rate — currently 10 per cent — on the first $500,000 of business earnings. But starting in January, if those businesses hold in excess of the new limit on passive income, some of that first half-million in earnings will be subjected to the much higher corporate rate, depending on how far over the new limit they are.” (https://www.cbc.ca/news/politics/tax-changes-cra-canada-1.4944505.)

 

The new rate has been created in hopes that small business will invest their money in other ways instead of having monies sitting idle. For example hiring more employees or expanding/advancing your business. The good news to this change though is small businesses are being taxed less. As of 2019 the small business tax rate has dropped from 10% to 9%.

 

Then there is the carbon tax which we already have implemented but is set to increase. This means we will see an increase in our outgoing expenses as a business. For example the cost to heat your office/store front will have an increase. If you have goods and products being moved there will also be that increase in fuel.

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