The Federal government tax changes that can directly affect you. Make sure you assess this summary with your advisor or tax specialist.

The upside is as follows:

• A 1.5% increase in the Canada Child Benefit will apply for the benefits of July 2018 through to June 2019. This translates to over $80 annually per child for those who qualify for Canada Child Benefits, plus $41 more annually for those who qualify for the Child Disability Benefit. The monies received from the Canada Child Care Benefits, are not taxable – not accounted as income on your tax return.
• Retroactive to January 1, 2017, some qualify for the Canadian Forces and Police personnel deduction. It now applies to all members on any overseas mission, without reference to risk factors. If you qualify, any income earned during an international operation will be tax exempt.
• A lower Small Business Federal tax rate means a benefit for Canadian entrepreneurs. Implementation starts on January 1, 2018, when the small business corporate tax rate will be reduced 0.5% from 10.5% to 10% and a further promised reduction to 9% by January 1, 2019.

The downside is as follows:

• The CRA has moved the date forward to start accepting 2017 tax returns on February 26th. This means that refunds will not be sent until March, which can hurt those who rely on their refunds in February.
• For 2017, the Federal children’s fitness tax credit and arts amount are now fully eliminated. This translates to $75 less worth of tax savings for anyone who maxed out the fitness credit, and $37.50 tax savings for those who maxed out the art amounts, per child. However, British Columbia, Manitoba, the Yukon and Quebec offer credits for children’s activities in fitness and art.
• The Public Transit amount was removed, and riders can only claim public transit passes purchased in the first six months of 2017. It depends on your expenditure on transit passes how this might affect your budget.
• For 2017, full- and part-time students will no longer be able to federally claim their education/textbook amounts which can reduce a full-time student’s claim by a few thousand dollars. The Ontario, Saskatchewan, and New Brunswick, provinces are also eliminating the credit for tuition fees. However, the federal credit for tuition fees does continue, and you will be able to carry forward unused education/textbook amounts from previous years.

Business Implications of tax changes

• There are changes for incorporated businesses using income sharing or “sprinkling. This allows owners to split income earnings between adult family members, even if they didn’t work for the corporation.
  • No longer can a family take advantage of allocating income to lower earners and reduce the family’s overall tax bill unless family members can prove that they made a reasonable contribution to the business, such as labour, investment or other financings to the business, or financial risks such as a co-signing a loan. These changes do not apply to your 2017 tax year.
• Pending changes to passive corporate income will not take effect for the 2017 tax year. Because corporations are taxed less than an individual taxpayer, they have more after-tax income with which to make investments. The legislative theory is that this gives corporations an unfair advantage. A proposed tax rate applying to corporations with more than $50,000 of investment is planned to begin after the 2017 tax year.