Navigating the 2018 Small Business Tax Changes To Your Advantage
This week Finance Minister Bill Morneau delivered the 2018/19 budget to the house, a few short months before the June Ontario general election. With the Liberal Party taking blows in the polls, Trudeau looks to be leading a huge budget shakeup to restore voter support and confidence as well as tackle the economic challenges that lie ahead for Canada.
Morneau noted that this budget is aimed at helping middle class families and lowering the unemployment rate while also tackling international competition and gender equality. The renegotiations of NAFTA and the on two punch of the TTP talks that have collapsed thanks to the Trump administration have served as painful economic blows which certainly have not been addressed in this budget.
While the new budget spends more on social development and equality, we have seen a toughening of small business tax laws. With my action plan in place at your business you will be able to take full advantage of the new laws to help your business save money and expand.
Business and Personal Tax Reforms
One of the most noteworthy elements of this year’s budget is the effect it will have on small businesses as well as lower income households. If your company earns between $50 000 and $150 000 annually, you will find a reduced amount of your active income will be applicable for taxation.
As long as your company is earning less than $500 000 per year, you will be eligible for this new tax bracket which will stand at 9% by 2019. This focus on passive investment income will lead to reducing your eligible tax rate by $5 for every dollar earned above $50 000.
Other notable tax reforms include closing the income sprinkling loophole for corporations. This will be a thing of the past with new measure planned that should garner the government more than $900 million in revenues. Corporate Tax benefits generated by creating artificial losses will also be curbed with new laws and regulations that should add over $550 million to the budget.
Overall these reforms are a bit watered down, especially in light of the massive reforms seen in America which were implemented to be a driver of investment. Personal Income tax has also been simplified and gives some relief to lower income families.
Rather unsurprisingly a large scale tax reform and reduction would leave too large a hole in the government budget with the increase in social spending. This budget hole has already been made $2.1 billion larger due to the failed TPP’s lost tariffs.
New Broadband Infrastructure Opens Up Investment Opportunities
Spending on public infrastructure has been greatly reduced, with the majority of the previous year’s budget being redirected to other programs and departments. Notable is the push for increased broadband coverage in the country.
The $500 million spread over three years made available for this purpose will also be working towards improved mobile coverage in Eastern Ontario along with dedicated satellite network to provide access to more remote areas where broadband simply is not an option.
In this day and age the internet has become an essential tool for business and education and this drive should see computer literacy and innovation grow, providing an educated labor force and a dynamic business environment in the coming generations.
Money saved on your taxes using my product will put your small business in an enviable position to take advantage of new business opportunities in these areas where inaccessibility previously posed an obstacle.
The 2018 budget has so far been quite divisive with many feeling the government could have done more for corporations and businesses who are facing increased competition internationally. We will see a much needed increase in pay for women as the government pushes to squash the gender pay gap.
Youth unemployment will be tackled too with almost $450 million allocated to provide teens with work experience and skills. With such a strong focus on the people, notably the middle class, this budget holds little excitement for corporate and small business growth in Canada, instead focusing on growing the work force in terms of experience and skills with social security nets in place as incentives.
These challenges may be intimidating but with the right help and the right business strategy you can easily navigate the stormy waters. As a small business owner I have put together the perfect plan of action for you and your enterprise. If you want to take full advantage of the 2018/19 budgetary changes contact me and let’s work towards making our new tax regulations work for you.