Key Tax Changes for Businesses in 2019in Canadian Government News and Updates
• Further reduction of the Small Business Tax Rate from 10% to 9.
• Replacement of the Working Income Tax Benefit with the Canada Workers Benefit.
In this blog, we would like to focus on the key tax measures that took effect this 2019 for businesses.
• As mentioned, the Small Business Tax Rate has been reduced to 9% this year. Note that the new Alberta Small Business Rate (up to $500,000) is now 11%.
• The taxation of non-eligible dividends (generally distributed from corporate income taxed at the small business tax rate) was adjusted to reflect the reduction in the small business tax rate this year. The gross-up rate for non-eligible dividends is now 15% from 16% in 2018.
• In Budget 2018, the Federal government announced measures that will limit the ability of Canadian-controlled private corporations holding significant passive investments to benefit from the preferential small business tax rate and to restrict these private corporations from obtaining refunds from taxes paid on investment income while distributing dividends from income taxed at the general corporate rate. The changes have already taken effect this January 1st, 2019.