What does the 2018 federal budget mean for your taxes?
The federal budget for 2018-2019 was presented on February 27, 2018 – and some of the changes also mean changes for your taxes.
For example, if you are a lower-income taxpayer who is working, you can expect bigger refunds beginning in 2019 as the result of a new Canada Workers Benefit. And if you are starting a family, changes to the EI program will allow an additional five weeks of benefits when both parents agree to share parental leave.
Below is a summary of the changes that have the biggest impact on taxes:
The Working Income Tax Benefit gets a makeover
Effective for the 2019 taxation year, the working income tax benefit (WITB) program will be getting a new name (Canada Workers Benefit) with increased benefits. Single working taxpayers with net income up to around $24,000 will now qualify (up from around $18,800) while working single parents and families will now be able to earn over $36,000 (up from $28,975).
These changes mean an individual earning $15,000 would receive up to almost $500 more in 2019 than in 2018 and an estimated 300,000 more workers will receive the benefit in 2019.
The disability component of the WITB will remain in effect, with the maximum benefit increasing to $700 in 2019, and the phase-out threshold increased to $24,111 for single individuals without dependents and to $36,483 for families.
The Small Business Corporate Tax Rate is reduced
With corporate tax rates being slashed south of the border and the danger of the North American Free Trade Agreement being terminated, there was pressure on the Finance Minister to reduce the general corporate tax rate in order to remain competitive. However, any immediate reaction on this front was ruled out.
However, the small business corporate tax rate was reduced from 10.5% to 10% effective for 2018 and will be further reduced to 9% for 2019.
New EI Parental Sharing Benefit are here
The 2018 budget proposes a supplemental “parental sharing benefit” which will provide an additional five weeks of benefits when both parents agree to share parental leave, designed to provide greater flexibility—particularly for mothers—to return to work sooner, if they so choose, knowing their family has the support they need.
Additional changes to the EI program will extend the Working While on Claim program to maternity and sickness benefits so that mothers will have greater flexibility in planning their return to work while keeping more of their EI benefits. This pilot program, which was originally due to expire in August 2018 has now been extended to August 2021 and allows claimants to keep 50 cents of their EI benefits for every dollar they earn, up to a maximum of 90 per cent of their EI benefits.
More Medical Expenses can be claimed
Effective for 2018, taxpayers suffering from a severe mental impairment will be able to claim the costs of caring for a service animal to help cope with such tasks as guiding a disoriented patient, searching the home of a patient with severe anxiety before they enter and aiding a patient experiencing night terrors. However, animals that provide comfort or emotional support but have not been specially trained to perform the tasks above will not be eligible.
Foreign-Born Status Indians are now eligible for the Canada Child Benefits
When the Canada Child Benefit (CCB) was introduced in 2016, eligibility was extended to foreign-born status Indigenous individuals who resided in Canada but were not Canadian citizens or permanent residents. Under the rules for the existing CCB, these individuals were not eligible. As the result of measures contained in the 2018 budget, these same taxpayers will be allowed to retroactively apply for CCB for the 2005 taxation year through to June 30, 2016.
If you have questions about what these changes mean for you, H&R Block Tax Experts are always available to connect. For more information, visit one of H&R Block’s offices or online at www.hrblock.ca.