Various deductions and credits can help to reduce the amount of taxes payable to the Canada Revenue Agency (CRA) each year. Please take a few moments to review the following items, to ensure you do not miss out on any eligible expenses for you and your household. Please feel free to contact your Kemp Harvey Group office if you have any questions or concerns about whether you would qualify for any of these deductions and credits.
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.
This is another reminder to be aware of creative fraudsters. Recently a client came to us with an email they received from “Canada Revenue Agency (CRA)”. The email claimed they were entitled to a refund from the filing of their personal income tax return. The email stated they could obtain the refund through direct deposit by clicking on an attached link and entering their bank account information. The link brought them to a site that looked in every way like the actual CRA website. It was very convincing. Luckily, in this case the client was suspicious, and came to us for clarification. This email was a scam.
It is important to remember that CRA will never request information from you through email or text messaging. They will only contact you by mail or phone.
If you are not sure about the authenticity of a call or letter it is best to phone CRA at 1-800-959-8281 to ensure it is legitimate.