There are few changes to personal income taxes in 2018. Most personal tax rates remained the same in 2018 as compared to 2017.
There was a change in the provincial tax rate on income over $150,000, which has been increased by 2.1% for ordinary income over that threshold. There has also been an increase in the amount of tax paid on ineligible dividends.
If you are in the highest tax bracket in 2018, which starts at $205,842, the tax rate on salary and interest earned above that threshold has increased to 49.8%. The tax rate on ineligible dividends has increased to 43.73% in the highest bracket.
In terms of documents you need to bring in to your Kemp Harvey Group office, the biggest change will be the documents you no longer need to provide. All fitness and arts tax credits have been eliminated, so you do not need to supply us with any receipts for those expenditures.
Similarly, public transit passes are no longer deductible, so we do not need copies of those receipts either.
Income splitting rules, which were announced in 2017, are now a factor to be considered when preparing your 2018 personal income tax return.
If you or a member of your family has received income from a related private company, partner-ship, or trust in the year, you may be subject to the new rules. If we have not worked on these related entities, or are unclear on their structure, we may need to discuss this income with you in greater detail.
These changes to income splitting do not affect the availability of pension splitting. This valuable deduction is still available in 2018 and for the foreseeable future.
Professionals such as a doctors, lawyers, accountants, dentists, and chiropractors must now report their work in process at the end of their fiscal year.
You will need to provide an analysis with your records indicating the total work in process of your business. If you are unsure of how to calculate your work in process, your Kemp Harvey Group office can help you determine the calculation.