January 3, 2019
by DCY Professional Corporation Chartered Professional Accountants
Accelerated Investment Incentive – Capital assets, which are written off over a number of years, will be written off up to three times as fast in the year of purchase. Previously a $10,000 autoclave, which would have resulted in a tax write-off of $1,000, will now receive a tax write-off of $3,000 in the first year. In year two, the tax write-off will be $1,400 (($10,000 – $3,000) x 20%) under the new rules.
LIFT – Low income family members could save up to $850 in provincial personal income taxes. To qualify, the taxpayer must have employment income. The potential tax savings (i.e. $850) is reduced where the taxpayer’s income exceeds $30,000 or the family’s income exceeds $60,000.
EHT – EHT is currently payable at a rate of 1.95% on salaries over $450,000 per year. The new rules mean the first $490,000 of salaries is not subject to EHT. For corporations that have salaries in excess of $450,000, this will reduce the EHT expense by up to $780 per year.
Passive income rules – Good news for dentists. Corporate taxes are made up of a provincial portion and a federal portion. The provincial tax portion will not be subject to the new passive investment rules. The federal tax portion will still be subject to these rules. Corporations that have passive investment income exceeding $50,000 per year (including those of associated corporations) could continue to defer up to $40,000 in provincial corporate taxes each year.
Adjustments to personal tax rates – Changes that were announced previously by the Liberal government have been cancelled. The proposed Liberal changes did not have a major impact on overall taxes. The cancelling of these changes has very little impact on dentists.
Amendments to employment laws: Certain changes that were implemented by the Liberal government have been replaced. In particular:
This summary was prepared by DCY Professional Corporation Chartered Professional Accountants who have been advising dentists/doctors for decades. Additional information can be obtained by phone (416) 510-8888, fax (416) 510-2699, or e-mail firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com. Visit our website at: www.dcy.ca. This article is intended to present tax saving and planning ideas and is not intended to replace professional advice.