Now that Canada Revenue Agency (CRA) opened up its electronic filing system (EFILE) for 2018’s income tax and benefit returns, we are now officially in tax season.
While the CRA opened up electronic filing yesterday, there’s still plenty of time before the April 30 deadline for the submission of personal income tax returns (June 17 for self-employed people). Still, small business owners, people that relocated for work purposes and service animal owners should be especially interested in this year’s changes.
New changes for small business owners
Small business owners will be happy to know that the federal small business tax rate was lowered from 10.5% to 10%.
Due to the accelerated cost allowances recently introduced by the federal government, businesses will be able to claim deductions for capital purchases made after Nov. 21, 2018 and become available for use before 2028.
This provision will help small business owners, such as Airbnb owners or small start-ups since it could apply to the purchase of furniture, electronics, appliances and other such purchases incurred for business reasons.
Split income rules have also changed for 2018’s tax year. Business owners will not be able to pay dividends or shareholder benefits to family members in order to reduce their tax responsibility unless the family member can prove they have actively participated in the business within the last five years.
Moved for the purpose of work
Individuals who had to relocate due to work-related reasons will see an additional change, as well. You still have the option to claim moving expenses on this year’s tax returns but loans incurred in order to finance the relocation are no longer tax deductible.
Changes for service animals
Tax credits for service animal expenses were further expanded as well. Though there are already provisions available for service animals trained to help individuals with blindness, deafness, limited mobility, and other chronic conditions, 2018 will be the first tax year to also include service animals trained to assist individuals with severe mental limitations.
Taxpayers with a need for service animals can claim credits for the cost of buying the animal, food costs, vet visits, as well as the cost of training it.
However, animals which only provide comfort and emotional support do not qualify for these tax credits.
There’s still a bit of time left for those who want to invest in their RRSP. Though you can contribute to it whenever you want, if you want your RRSP contribution to apply to your 2018 tax return, it must be filed by March 1.