1. NO to Provincial Equivalent of Small Business Deduction Claw BackThe Review states that the Ontario government will not implement parallel measures enacted by the Federal government to claw back the corporate small business deduction limit when passive income of $50,000 or more is earned by a corporation or group of associated corporations.
2. NO to Increase in Personal Income Tax RatesOntario will not be moving ahead with the replacement of the provincial personal income tax surtax through an increase in the personal income tax rates. These measures were originally proposed by the former Ontario government in its final budget. The provincial personal income tax rates will remain as they are currently. Had the proposal been implemented, personal income tax rates would have increased slightly. A table showing the current combined Federal and Ontario personal income tax rates is reproduced below:
|2018 Taxable Income||2018 Marginal Tax Rates|
|Other Income||Capital Gains||Canadian Dividends|
|over $42,960 up to $46,605||24.15%||12.08%||-1.20%||12.57%|
|over $46,605 up to $75,657||29.65%||14.83%||6.39%||18.95%|
|over $75,657 up to $85,923||31.48%||15.74%||8.92%||21.07%|
|over $85,923 up to $89,131||33.89%||16.95%||12.24%||23.87%|
|over $89,131 up to $93,208||37.91%||18.95%||17.79%||28.53%|
|over $93,208 up to $144,489||43.41%||21.70%||25.38%||34.91%|
|over $144,489 up to $150,000||46.41%||23.20%||29.52%||38.39%|
|over $150,000 up to $205,842||47.97%||23.98%||31.67%||40.20%|
|over $205,842 up to $220,000||51.97%||25.98%||37.19%||44.84%|
3. NEW Low-Income Individuals and Families Tax (LIFT) CreditThe Review announced a new personal income tax credit, the LIFT Credit. This non-refundable tax credit will reduce or eliminate Ontario personal income tax for individuals who have employment income and total individual net income less than $38,500 (or family net income of $68,500).
4. YES to Employer Health Tax Exemption Increase
The Ontario government reiterated that the Employer Health Tax exemption will increase from $450,000 to $490,000 starting January 1, 2019. For more information regarding the tax changes and other measures discussed here, please contact your Crowe Soberman advisor today.
This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article. Please note that this publication should not be considered a substitute for personalized tax advice related to your particular situation.