Small Businesses Untouched

Pie charts and percent

In the recent provincial budget, the provincial corporate tax rate increased from 10% to 11%. This rate applies to all companies which earn over $500,000.

For small companies who earn less than $500,000, their provincial corporate tax rate has not changed from 2.5%. Combined with the federal corporate taxes, small companies pay a total income tax rate of 13.5%.

Last Year for Safety Deposit Boxes

This current tax year will be the last year in which investors will be able to claim a deduction for amounts paid on the rental of a safety deposit box.

The decision came about because the federal government has been observing the trend of more people using safety deposit boxes for storing personal items, rather than investment items.

This all has been happening as society has moved towards storing financial documents electronically, eliminating the need for traditional, paper document storage.

Higher Incomes, Taxes

A temporary tax measure has been introduced for the 2014 and 2015 tax years, in order to increase the amount of tax paid by those earning the highest incomes in British Columbia.

Taxes, money

Currently, the highest tax rate in BC is 43.7% on income earned over $135,034. Starting in 2014, an additional tax bracket will be added with a tax rate of 45.8%, for those people earning over $150,000. This follows a global trend to increase the amount of tax paid by the highest income earners.

Because it is a temporary tax measure, and one not planned for the current year, it does offer some tax planning opportunities. If you know that your income will be over $150,000 in both 2014 and 2015, it may make sense to hold off on claiming your RRSP deduction in 2013, reporting it in 2014, instead.

In 2012, Ontario added a tax bracket for incomes earned over $500,000, and, in Europe, the French government has been attempting to implement a 75% tax on annual earnings exceeding one million euros.

If you are going to claim an RRSP deduction of $10,000, the deduction will be worth an additional $210 if you claim it on your 2014 tax return rather than your 2013 tax return.

If you are going to report dividends from your company, it may make sense to report those dividends in 2013 or 2016, if they would otherwise bump your income over $150,000 in 2014 or 2015.

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Did You Know… BC Early Childhood Tax Benefit

Young families received attention this spring when the British Columbia Early Childhood Tax Benefit was introduced in the provincial budget. Starting April of 2015, this benefit will be paid out as a monthly credit, similar to other child tax benefits.

Parents will receive $55 per month for each of their children who are younger than six years old.

Reflecting other child tax benefit programs, the new benefit will be income-based. Once a British Columbia family’s net income exceeds $100,000, the amount of the early childhood benefit will be reduced incrementally.

File Taxes On Time

If you have children, you and your spouse most both file your personal tax returns in order to receive the full amount of the Canada Child Tax Benefit (CCTB). In order to ensure there is no delay in receiving your CCTB, you must file your return by the appropriate due date. Even if you are delayed and do not forward your tax returns until the end of the year, the government will still back-date any payments which were owed to you.

This is similar to many other government programs. If you are eligible for a GST refund, or the Guaranteed Income Supplement, your returns must be filed by April 30th in order to ensure your payment will not be delayed.

The payment you receive in July for these programs is based on your personal tax return from the previous year. In short, if the government owes you money, the sooner you get your tax return to their office, the sooner you will receive your funds.