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What’s new for this year? Below is a summary of recent personal tax changes. If you have any questions, contact your local MNP advisor to discuss.
Tax Rates and Credits: Personal income tax rates remain unchanged for the 2018 taxation
year. All tax brackets and most personal tax credits have been indexed for 2018. The 2018 marginal income
tax rates are outlined below:
Tax-Free Savings Account: For 2018, the annual contribution limit remains at $5,500. The
annual contribution limit will increase to $6,000 in 2019.
Non-Eligible Dividends: For 2018, the non-eligible dividend gross-up and the non-eligible
dividend tax credit on the grossed-up dividend will decrease to 16% and 10.03% respectively. The gross-up
and tax credit will further decrease to 15% and 9.03% for 2019 respectively.
Canada Workers Benefit: The Canada Workers Benefit (CWB), formerly known as the Working
Income Tax Benefit, is a refundable tax credit paid to low income workers. Starting in 2019, the CWB for a
single individual without children will be increased to $1,355 with a clawback rate of 12% of income,
eliminating the CWB at approximately $24,000 of income. For a family (couples and single parents), the
maximum benefit will increase to $2,335 and is eliminated at approximately $36,500 of income.
First-Time Donor’s Super Credit: Previously, individuals could claim an enhanced tax credit
on donations if they qualified as first-time donors. This credit was eliminated after 2017.
Tax Rates: Starting in 2018, BC introduced a new top personal income tax bracket of 16.8% (previous top rate
was 14.7%). This new rate will apply on taxable income exceeding $150,000. For BC personal income tax
rates, click here.
Eligible Dividends: Starting in 2019, the BC eligible dividend tax credit rate will be
increased to 12% (from 10%) on the grossed-up taxable dividend.
Consolidation of Caregiver Credits: Effective for 2018 and subsequent taxation years, BC is
replacing its Infirm Dependant Credit and Caregiver Credit with a single non-refundable tax credit, the BC
Caregiver Credit. This parallels change made federally in 2017. The maximum credit is $4,556 per infirm
dependant, reduced dollar-for-dollar by the dependant’s income above $15,419.
Low Income Climate Action Tax Credit: Effective April 1, 2018, the maximum annual low
income climate action tax credit increased to $135/adult and $40/child. Single parent families will
continue to receive the adult amount for the first child in the family.
Eliminated Credits: The following credits are eliminated for 2018 and subsequent tax years:
BC also announced that the education tax credit will be eliminated effective for the 2019 and subsequent
taxation years. Unused education amounts carried forward from years prior to 2019 remain available to be
claimed in 2019 and subsequent taxation years.
Tax Rates: For AB personal income tax rates, click here.
Carbon Rebates: Effective January 2017, Alberta introduced a non-taxable, refundable rebate
to protect lower and middle-income Albertans from the carbon
levy. The benefit amounts have increased for 2018.
Tax Rates: SK previously announced a reduction to each of its three income tax brackets by
0.5% effective July 1, 2017, with a further 0.5% reduction effective July 1, 2019. The July 1, 2019 planned
reduction will be temporarily delayed to a later time. For SK personal income tax rates, click here.
Eligible Dividends: SK had previously announced reductions of its dividend tax credit rate
on eligible dividends by 0.25% increments over the next four years, starting in 2017. These planned
reductions have been reverted. As of January 1, 2018, the rate will return to 11% (from 10.75%) of the
Annual Indexation: SK has temporarily suspended its annual indexation of the personal
income tax system starting with the 2018 taxation year.
Labour-Sponsored Venture Capital Tax Credit: The rate of this credit will decline to 17.5%
(from 20%) effective for the 2018 tax year. The maximum individual annual tax credit will decline to $875
Tax Rates: For MB personal income tax rates, click here.
Primary Caregiver Tax Credit: The process to claim the MB Primary Caregiver Tax Credit has
been simplified. The annual credit will now provide a flat $1,400 available to all eligible caregivers.
Tuition Fee Income Tax Rebate: Effective for 2018 and subsequent tax years, the MB Tuition
Fee Income Tax Rebate has been eliminated. Any unclaimed credits will lapse after 2017.
Tuition Fee Income Tax Rebate Advance: The MB Tuition Fee Income Tax Rebate Advance was
eliminated for tuition and ancillary fees paid in relation to school terms beginning after April 2017. MB
students will still be able to claim a tax credit on eligible tuition fees and the Manitoba education
Political Contributions Tax Credit: Starting in 2018, the maximum eligible contribution is
increased to $2,325 (from $1,275) and the total available annual credit is increased to $1,000 (from $650).
Basic Personal Amount Enhanced: The MB Basic Personal Amount will be increased beyond
expected indexation to $10,392 in 2019 and to $11,402 in 2020.
Education Property Tax Credit: The following changes will be effective starting for the
2019 tax year:
Tax Rates: For ON personal income tax rates, click here.
Non-Eligible Dividends: Starting in 2018, the non-eligible dividend tax credit rate
decreased to 3.29% (from 4.29%) of the grossed-up taxable dividend.
Tax Rates: For QC personal income tax rates, click here.
Eligible Dividends: QC has proposed to reduce its eligible dividend tax credit rate to
11.86% (from 11.90%) and its non-eligible dividend tax credit rate to 6.28% (from 7.05%) of the grossed-up
taxable dividend as of March 28, 2018.
Senior Assistance Tax Credit: Starting in 2018, QC has proposed a new refundable tax credit
for low-income seniors aged 70 and over. The refundable tax credit is $200 with an additional $200 if the
taxpayer has an eligible spouse. The tax credit is reduced if income exceeds $22,500 ($36,500 if the senior
has an eligible spouse).
Child Assistance Tax Credit: Starting in 2019, the child assistance component of the
refundable tax credit for child assistance will be renamed the Family Allowance and will be enhanced to
increase the maximum amount for eligible second and third eligible children by $500.
Tax Rates: For NS personal income tax rates, click here.
Enhancement of Basic Personal, Spousal, Dependant and Age Amount: Starting in the 2018 tax
year, the Basic Personal Amount, Spousal Amount, and Dependant Amount will be increased by up to $3,000
(from $8,481 to $11,481) and the Age tax credit will be increased to $5,606 (from $4,141). The maximum
increase is available to taxpayers with taxable income of less than $25,000, but will be gradually phased
out for taxpayers with taxable income between $25,000 and $75,000.
Removal of Maximum for Medical Expenses Tax Credit for Dependant: NS has removed the
$10,000 maximum on eligible medical expenses that can be claimed on behalf of a financially-dependent
New Innovation Equity Tax Credit: NS announced its intention to introduce a new, more
narrowly focused, Innovation Equity Tax Credit, beginning January 1, 2019. The existing equity tax credit,
which offered a personal income tax credit to individuals investing in eligible businesses, will be phased
out over time.
Planning for your own death is a difficult task. Often, we do not think about how our loved ones will be
affected once we pass on. Proper planning ensures that upon your death, your assets are distributed
according to your wishes.
A Will is the most important part of the estate planning process. It is a formal document that details how
your estate will be distributed when you pass on. It is also where you can make additional provisions for
your children if you and your spouse (or partner) pass away at the same time.
The following are some examples of when you may wish to review your Will:
If you are interested in having MNP review your Will, please contact your local MNP advisor to discuss.
The Canada Revenue Agency (CRA) has become very efficient at matching information slips (i.e. T3’s, T4’s,
T5’s) reported by you on your personal tax return to information sent directly to CRA by third-party
sources (i.e. employers, financial institutions).
If a taxpayer fails to report an amount of income of $500 or more on his or her tax return for a year, and
in any of the preceding three taxation years, the taxpayer is liable for a 10% federal penalty (or 50% of
the difference between the understated tax (and/or overstated credit) related to the unreported amount and
the amount of tax withheld related to the unreported amount, whichever is less) and, in many cases, a 10%
provincial penalty on the unreported income. Because of these large penalties, it is critical that
taxpayers keep track of all tax information slips that are received or should have been received. If you
discover a 2018 tax information slip after you have filed your tax return, it is critical that you
immediately file an amended T1 with CRA. To avoid any penalties, you must file the T1ADJ before CRA matches
the slips in their system.
Since 2010, CRA has conducted an annual letter campaign where educational letters are mailed to individuals
in selected activity groups. CRA sends out two types of letters: one to educate individuals about specific
claims made on their returns, and another to educate and notify individuals that CRA may conduct an audit
in their activity group. Receipt of this letter does not mean that a tax return has been selected for
audit. However, where certain losses or deductions have been claimed in error, CRA allows taxpayers the
opportunity to amend their tax returns or make a voluntary disclosure of such errors.
The CRA is continuing with the letter campaign for the 2018 filing season.
If you receive one of these letters and have any questions or concerns, contact your MNP advisor to discuss.
Through this program, CRA encourages you to come forward and correct your tax affairs – you can disclose
inaccurate or incomplete information, or even information that was completely omitted from previous
filings. Any taxpayer can make a disclosure, and the disclosure can relate to any type of income tax return
or information return as well as GST/HST filings.
Tax penalties and potential prosecution may be averted for successful VDP submissions. There are several
conditions that must be met. Talk to your MNP advisor if you have questions or require additional
Did you know that many taxpayers may be required to file annual U.S. personal tax returns and may not even
be aware of it?
Generally, a Canadian resident individual may be required to file a U.S. personal tax return if they worked
in the U.S., own U.S. rental property, sold U.S. real estate in a year, or own an interest in a U.S.
partnership or limited liability company (LLC).
If you are a U.S. citizen or a permanent resident (Green Card holder), you are required to file a U.S. tax
return annually to report all worldwide income and other information including details on any financial
accounts, corporations, trusts, and partnerships, to the Internal Revenue Service (IRS). Note that if you
were born in the U.S., you are automatically a U.S. citizen. Even if you were not born in the U.S., if one
of your parents was a U.S. citizen, you may have inherited citizenship.
The IRS has begun to actively seek out Americans living abroad that are required to, but have failed to file
U.S. tax returns including through foreign (including Canadian) banks through FATCA reporting that
commenced in 2015.
In 2012, the IRS introduced a program to encourage taxpayers, meeting certain strict criteria, to file
delinquent tax and information returns for a limited number of prior years. The major benefit of filing and
qualifying under this program is the waiver of significant penalties for delinquent information returns.
However, this program is based on an administrative policy and may be terminated at any time.
If you think you may have a U.S. tax filing obligation, contact your local MNP advisor to speak to one of
our cross-border Tax Specialists.
As you are likely aware, the new tax on split income (TOSI) rules came into effect on January 1, 2018.
Generally, the purpose of these rules is to prevent income splitting with family members who have not met
certain tests in respect of labour or capital contributions to an underlying business. Income subject to
TOSI is taxed at the top personal rate and eliminates access to most personal tax credits. If you have
questions or concerns that these rules may apply to you, your business or family members, we would be happy
to discuss this with you.
The BC government introduced a Speculation and Vacancy Tax, effective 2018, which will be levied on owners of
residential property located in many areas of BC. The Speculation and Vacancy tax rate for 2018 is 0.5% of the
property’s assessed value, and will vary from 0.5% to 2% of the property’s assessed value in 2019 and later years.
Certain exemptions apply (for example, where the BC residential property is the owner’s principal residence in the
year). Declaration forms for 2018 will be mailed to residential property owners by mid-February 2019. This
declaration must be completed and filed to claim any exemptions; otherwise, the owner will be assessed at the
maximum rate. Please talk to your MNP advisor if you have questions or require additional information.
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