2018-01-26 00:00:00 Pro Accounting English Learn about Ontario’s tax rate changes for small businesses in 2018 and about potential tax incentives available to small businesses.... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Professional-reviews-financial-planning-for-accounting-practice-on-smartphone.jpg Ontario Drops Small Business Tax Rate for 2018

Ontario Drops Small Business Tax Rate for 2018

1 min read

Effective Jan. 1, 2018, Ontario is lowering the provincial income tax on small businesses from 4.5 percent to 3.5 percent. The shift is part of a government plan to help small businesses handle an increase to minimum wage. On the first day of 2018, the minimum wage in Ontario will increase from $11.60 to $14 per hour, and on Jan. 1, 2019, the rate will increase to $15 per hour.

Let your clients know about this shift so they know what to expect in the new year, and potentially help your clients figure out how these savings can offset increased payroll costs. You may also want to remind your business clients that they only receive the lower rate if they are eligible for the federal small business deduction. If they don’t qualify, they have to pay the higher provincial tax rate. Of course, federal income tax applies on top of those amounts.

In addition to offering small businesses a lower income tax rate, the Ontario government is also committing to spending at least a third of its procurement budget with small businesses. You may want to help your clients apply to be a government supplier or at least let them know about the provincial government’s plan to buy more from small and medium businesses. On top of that, there’s also a $1,000 incentive for hiring youths between the ages of 15 and 29. To qualify, your client’s business must have less than 100 employees, and workers must stay with the company for at least six months.

Your clients count on you to prepare tax returns and crunch the numbers, but in many cases, they also appreciate advisory services. Staying on top of changes to tax rates is essential, and you should always let clients know how these changes may affect them.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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