Canada makes updates and slight changes to the tax code every year. If you’re a small business owner, it can be challenging to keep track of the changes that affect your business and your personal finances.
There are changes to tax codes nearly every year. By staying abreast of these changes, you don’t miss anything that could impact you or your business. Best of all, you don’t face reassessment or penalties.
Canadian Revenue Agency 2019 Tax Changes
Working Income Tax Benefit (WITB)
This benefit provides low-income workers with tax relief, and 2019 brings two changes to the WITB. First, the name is being updated to Canada Workers Benefit (CWB). And beginning in 2019 and for each year after, the benefit increases with the inflation rate. Canadian disability, or Canada Workers Benefit Disability, will undergo similar enhancements.
In 2018, the maximum benefit under the WITB for an individual was $1,059, and for families, $1,922. In 2019, these benefits increase to $1,355 and $2,355 for individuals and families, respectively. An added bonus is that, even if you don’t claim it on your return, the CRA automatically applies it according to your designation as individual or head of a household. If a couple claims this benefit, or the CRA automatically applies it, the CRA decides the eligible partner to receive this benefit.
Service Animals as a Medical Expense?
In 2019, the tax credit for medical expenses broadens. If you or someone in your household needs a service animal, you can claim the costs to train the animal, take care of the animal, and cover all of its needs (food, cage, medical, etc.) as a medical expense.The CRA defines a service animal as one that has gone through special training in order to perform necessary tasks due to an individual’s impairment. The impairment that the animal is used for must have occurred during or after 2017 for this tax credit to apply.
Are You a Registered Disability Savings Plan Holder?
This program helps people with disabilities save for future planning. As it stands, if the disabled individual cannot in good faith enter into a legally binding contract, they can appoint a legal representative (usually a member of their family) to administer the savings plan. In this situation, the family member must already be designated as the beneficiary’s legal representative. Sometimes, cases can be tied up in court regarding the appointment of representation for disabled patients, especially if the disabled person is unable to speak or otherwise make their wishes known.
With 2019’s changes to this savings plan, a member of the disabled person’s immediate family can be designated as the planholder for the beneficiary, even if that person has yet to be named the legal representative. This tax measure is extended through 2023, and, if you become your family member’s planholder before 2023 comes to an end, you can remain as planholder after that year.
Voluntary Disclosure Program (VDP) Changes in 2019
There were several changes made to the VDP in 2018, namely the addition of the Limited Program, offering assistance to taxpayers who come forward to correct inaccurate or incomplete information or to disclose information not previously reported.
Rate and Limit Changes for 2019
For 2019, more changes are planned in the way of rate and limit changes:
- Federal income and provincial income tax brackets are going to be adjusted for inflation.
- Employment Insurance premium costs are also being adjusted. The current rate is 1.66%. Come 2019, that rate decreases to 1.62 %.
- Maximum pensionable earnings increase to $57,400 – the employee/employer contribute rate rises to 5.1%.
- Canada Child Benefit rates are going to be adjusted for inflation beginning with the 2019 tax year.
Tax-free Savings Accounts (TFSAs) Annual Contribution Limit Increase
If you have a TFSA, it’s time to celebrate. The annual limit you can contribute is going to be raised from $5,500 to $6,000 per year. Just like the name suggests, you can save your money and watch it increase each year, tax-free. And when you’re ready to withdraw funds, you don’t owe any tax either.
To stay abreast of what’s happening in the world of Canadian tax codes, check out the Canada Revenue Agency’s What’s New page. This section of the agency’s website features regular updates, and new posts appear about twice per week. This page has continuously updated news releases, tax tips, and alerts on CRA programs and services.
For the maximum assurance your tax return will be accepted, it’s a good idea to work with a reputable tax accountant or use a tax preparation software like TurboTax that’s updated annually. With either approach, you answer questions and provide your financial information, and the accountant or software ensures your return is legally compliant – and that you don’t miss any new deductions.
Consider doing regular internet searches for phrases such as “updates to tax laws” or “tax laws 2019.” Rather than looking at the general results lists, hit the “news” category so you can see what’s being reported in the media. It’s important to note that many news stories focus on upcoming laws or new tax codes under discussion, rather than on tax laws that have already been added to the books, so don’t confuse the two. But it’s still a good option to stay abreast of new tax laws and tax law changes on the horizon.
The tax filing deadline may not be until April 30, 2019, but it still pays to plan ahead. If you’re as informed as possible, you can keep more of your hard-earned money in your pocket.
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