What’s New for the tax year 2018

The following points have been compiled from recent CRA communications. For further information contact CRA or Copetti & Company (see below).

• The TD1 forms for 2018 are available from Canada Revenue Agency.  If there have been changes which will affect tax exemptions, you should ensure that you or your employees complete these forms so that the employer (or other payer) will deduct the appropriate amount of income tax from the employment income or pension income.  New employees should always complete these forms.  For those working only part time, if their total income for the year will not exceed exemptions, you should tick the appropriate box on the back of the form, so that the employer will not deduct any income tax from pay cheques.
• Employment income is included on a T4 for the year in which it is received, not earned.  If a payment is made in January 2018 for wages earned in December 2017, this amount will be reported on the 2018 T4, not on the 2017 T4. 
• The per-kilometre amounts that may be paid tax-free to employees or officers as reimbursement for motor vehicle expenses incurred while travelling for business purposes using their personal vehicle will increase by 1 cent, to 55 cents per km for the first 5,000 km and 49 cents per km for each additional km. 
• The prescribed rate used to determine the operating cost taxable benefit to an employee for an employer-owned vehicle is increased for 2018 by 1 cent, to 26 cents per kilometre.  The standby charge taxable benefit factors for automobiles remain unchanged.
• The prescribed rate used to determine the operating cost taxable benefit to an automobile sales person for an employer-owned vehicle is increased for 2018 by 1 cent, to 23 cents per kilometre.  The standby charge taxable benefit factors for automobiles remain unchanged. 
• The 2018 expense limitations for passenger vehicles for interest expense, monthly lease costs, and capital cost allowance (CCA) will remain unchanged from 2017.
• The government has released draft legislation which will enact changes to the Tax on Split Income (TOSI) rules, also known as the "kiddie tax" rules.  The legislation expands the "income sprinkling" situations in which income is considered "split income" and is taxed at the highest personal income tax rate.  This is no longer just a "kiddie" tax.  The legislative changes are to be in effect for the 2018 taxation year.
• Eligible Canadian dividends are increased by 38% for inclusion in income, resulting in increased net income for tax purposes, which is often used in calculating eligibility for income-tested benefits.  If you are in a low tax bracket and receive income from dividends, you should review your finances to avoid jeopardizing government benefits.  Keep in mind that taxes are much lower with Canadian dividends and capital gains than with interest income.

For help understanding the new taxation changes and to mitigate any detrimental affect on your finances, please contact us