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Once-In-A-Generation Tax Reform Isn’t The Best Path To Fairness

Canadian legislators are still looking at possible tax changes in the Senate. The Finance Committee’s recently release report includes fresh recommendations for changes and tweaks to the Canadian tax code. One of the biggest suggestions was that the changes should be set aside, and the tax code instead be subjected to a much larger review leading to a complete overhaul. The backers of this proposal feel it would offer a much stronger chance to be fair to Canadian taxpayers that merely modifying the tax code again.

Why Canada is unlikely to take a chainsaw to corporate tax rates in wake of U.S. cuts

Tax and policy experts are not looking for Canada to open a front against the United States in the ongoing war over corporate tax cuts. Those same experts believe Canada has other options they can turn to in that conflict, rather than simply using a brute force approach such as raising corporate tax rates. Those choices include regulations that apply to corporate concerns, or adjusting the laws that apply to corporate investments. Carbon tax revenue is also on the table to encourage business activity.

Here are your income splitting options now that the private corporation avenue is dead

Income splitting, the practice of small business owners giving dividend income to family members, regardless of their employment status within the company, has been curtailed due to new tax regulations that went into place the first of the year. This increases the tax burden on small businesses. There are however, some ways to continue doing this. If you do it correctly you can income split on your personal income or to spouses and children without breaking the new tax laws.

Key Takeaways:

Income splitting is where someone with more money in the family transfers some to someone with less money to help with taxation burdens and make everyone a bit more level.
Seniors can still split eligible pension income with a spouse or partner through annuity-type payments from an employer-sponsored registered pension plan, RRIF or Life Income Fund, or by contributing to a spousal RRSP.
Spousal income splitting can be done through a prescribed rate loan strategy whereby the funds are loaned to your spouse or partner to invest and excess returns are then split. A modified version of this will work to income split interest or dividend income with your kids.

“There are still a bunch of perfectly legal income-splitting strategies you may want to consider for this tax year.”

Alberta’s small businesses chafe under new labour laws

Alberta’s small businesses are concerned over new labour laws. Small business advocates in Alberta are raising concerns about the timing of new provincial employment standards that are taking effect on January 1st, 2018, which may bring added costs as well as regulatory burdens to businesses. The new rules address minimum standards in a variety of areas, including overtime pay, job-protected leaves, compressed work weeks, youth employment and holiday pay. Changes to the Employment Standards Code haven’t been addressed for 30 years, so these new laws are to keep pace with changes in Alberta’s workplaces.

Canadians are piling on debt, but still call debt reduction their top financial priority

While Canadians continue to piling on a lot of debt, 25 percent say debt reduction their number-one priority according to a recent CIBC poll. Household debt rose to record levels in 2017, but a positive from the survey is that 1/3 are making the necessary adjustments. 46 percent say they reduced spending on non-essential items in 2017, and 31 percent made a household budget. Although it’s believed that the $1.3 trillion in Canadian mortgage debt is a prime reason why only 16 percent achieved their financial budgets. With rate hikes expected from the Bank of Canada in 2018, questions about the economy’s ability to cope have led to a reluctance to raise interest rates quickly.

What’s An Average Credit Score For Canadians And Why Does It Matter?

Credit scores say a lot about you and your financial health. This three-digit number represents how good someone is at paying back debt borrowed through credit cards, student loans, a line of credit and other similar debt instruments. People with numbers above 700 are deemed very good at paying off these loans. Lower scores may be a result of maxing out credit, missing payments or carrying a balance from one month to the next.

Key Takeaways:

Credit scores can go up and down depending on your financial situation.
Keeping this number high is especially beneficial if you want to make a big purchase like buying a home or a car.
Depending on the job you’re applying for, some companies may even look into it to see how responsible you are with spending and managing their money.

“Credit scores are three-digit numbers with far-reaching consequences. The average Canadian scores around 600, with numbers in the 700 and above considered “very good.””

CFIB’s 12 things small businesses will be watching out for in 2018

According to Dan Kelly, President of CFIB, small businesses are facing a number of obstacles this coming year. Business owners are already starting to feel a little defeated with minimum wage hikes in many of the provinces and property-tax increases on commercial buildings. Another concern are the confusing new regulations around shared income in family businesses. These changes require a tax professional to help a business owner sort it out. Payroll taxes are also on the way up and the premiums on Canada Pension plans are also set to increase. Competition from America is another concern, especially with the U.S.’s most recent tax reform, which may encourage Canadian companies to relocate.

New rules cost Calgary restaurateur $11K in stat holiday pay for staff

Michael Noble, owner of two prominent Calgary restaurants was recently forced to pay his staff of 140 people for New Year’s day despite neither location being open. Because new labour laws that went into effect that day, it requires employers to provide holiday pay regardless of whether an employee works it or not. For Noble, it cost him $11,000 in statutory holiday pay. This shows the struggle small businesses in Alberta face with these changes. Many businesses will have to likely look to cut staff and/or benefits because of this change, among other ways to cut costs.

Essential Stuff To Know Before You Start A Business

Owning a business can be very rewarding, and when you’re starting a business, proper preparation and organization can go a long way to setting you up for success. An area of business often overlooked by entrepreneurs is the new task of managing finances and taxes, which can be complicated. Even decisions you make before you begin can affect your business. For instance, while a business owner may need to invest a sizable amount of money upfront, that amount can be claimed as a business expense on your tax return – provided it was incurred after you actually started the business. Therefore, it’s wise to minimize any business expenses until you are up and running.

Key Takeaways:

One of the very first decisions to make is what type of business structure you want to create – sole proprietorship, partnership or corporation. The type you choose will be the main deciding factor for how you will be taxed by the Canada Revenue Agency (CRA).
Right away, you’ll want to signup for a business number (BN) with the government, and CRA program accounts like GST/HST, payroll program and import-export program accounts.
It’s wise to surround yourself with experts who can help, from seasoned mentors, to other entrepreneurs to tax experts.

“Running a successful business takes drive, innovation, passion and … wait for it … organized bookkeeping! That wasn’t what came to mind, was it? Most Canadians don’t dream of owning their own business so they can handle payroll and complicate their income tax return.”

New tools permit tax cuts for Alberta small businesses but impact unclear yet

New rules in the Municipal Government Act will allow local governments the ability to offer tax relief to small businesses. Many of these businesses have been hit by the economic downturn as well as tax changes, so this is one way Alberta’s cities and towns can help struggling businesses. The new rules give local governments the ability to create a small-business property tax subclass and to charge them up to 25 percent less. It isn’t mandatory, and there is plenty of flexibility for municipalities to determine what is a small business and what kind of cuts to provide.