As 2019 comes into full swing, it’s bringing some tax changes with it that will have some big impacts on Canadians and small business owners. With income tax being the top expense for most Canadian families, it’s worth it to be aware of what’s going to change in 2019. Read on as Liu & Associates highlights a few of the major changes you’ll see in 2019 when it comes to your income taxes.
Why Do Tax Rules Change?
Taxes can change for a number of reasons. People often see changes to taxes when a new government comes into power, when a government is trying to win favour with voters, or when a loophole is identified. It’s important to keep your finger on the pulse of the tax landscape so you are aware of the changes and how they might impact you. Worst case scenario, you could face a reassessment or penalty from the CRA if you fail to take into account the new tax rules when filing your next return.
Increase In CPP Premiums
Canada Pension Plan (CPP) premiums will be on the rise for the next five years due to a program enhancement plan. What does this mean for you? You’ll notice more money off your paycheque going to CPP. The good news is that you’ll eventually get to reap the benefits of this extra money in retirement.
Decrease In Employment Insurance Premium
While CPP premiums may be increasing, employment insurance (EI) premiums will going the opposite direction. Employment insurance premiums are being decreased by four cents for every $100 of insurable earnings. This is the second year of decreases to EI premiums.
Decrease In Small Business Tax Rate
Small business owners can rejoice the fact that their tax rate is going down from 10 to nine percent. Similar to EI premiums, this is the second year we’ve seen decreases in the small business tax rate. This reduction makes the combined federal-provincial-territorial average income tax rate for small businesses 12.2 percent, which is the lowest in the G7. Tax savings means more money to reinvest in your company.
Changes To The Working Income Tax Benefit
The Working Income Tax Benefit is a refundable tax credit that helps to give tax relief to low-income individuals and families. At the start of 2019, the program was renamed the Canada Workers Benefit (CWB) and was enhanced in order to put more money in the pockets of low-income workers and encourage them to stay in the workforce. To keep things easy, the CRA will automatically determine if you’re eligible to receive the CWB and assess your tax return as if you’ve already claimed it, even if you hadn’t upon your original filing.
If you need help filing your 2019 tax return, contact the team at Liu & Associates today. Our experts are up to date on all tax system updates and will make sure you get the best return possible.