Ocean Mist

Posted by Tax Consultants

2014/2015 Tax Changes

Higher Taxes in BC – The province has introduced a new temporary tax bracket on income over $150,000 or higher in 2014 and 2015.  The provincial tax rate on this income will climb from 14.7% to 16.8% meaning that all income above 150K will be taxed at a new and higher combined provincial and federal tax rate of 45.8% (currently 43.7%).  mk apples2mk 5

 

Dividends vs. Salary for Business Owners – Effective Jan 1, 2014, business owners benefitting from the small business deduction will lose the benefit of choosing dividends over salary income.  As there has been a 2%-3% tax advantage in electing dividends vs. salary payments, the 2013 Federal Budget introduced this change in order to improve the tax integration rules.  With the change, business owners will pay the same rate of tax regardless of which option is chosen.

 

Safety Deposit Boxes – The cost of renting a safety deposit box from your corner bank will no longer be a permitted deduction.  The rationale here is that more Canadians are storing personal items such as jewelry in the boxes rather than share certificates.

 

Lifetime Capital Gains Exemption – the exemption rate has climbed from 750K to 800K.  Owners of CCPCs (Canadian Controlled Private Corporations) will be exempt from paying tax on up to 800K of any realized capital gain from the sale of their business.  Certain rules apply.  If you’re interested in finding out how you can multiply the capital gains exemption with family members with the use of a family trust, drop me a line.

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Children’s Tax Credits – there are a number of tax credits which parents can access but time is running out for 2013 if you haven’t incurred the expense already.  These include the Children’s Fitness Tax Credit, and the Children’s Art Tax Credit.

 

Charitable Donations – as with the above, qualified donations should be made by year end.  Here’s a quick tax planning tip: You can make a donation in kind, meaning you can donate stocks or mutual funds showing a capital gain.  No tax will be payable on the capital gain and the donor will receive a tax credit calculated on the full value of the donation.