2018 Corporate Tax Updates

Corporate Tax Rates **

 General / Small Business (CCPC)*/ Business Limit / Investment Income (CCPC)*

Federal Tax Rates

15% / 10% / $500,000 / 38.7%

Alberta Tax Rates

12% / 2% / $500,000 / 12%

Combined Tax Rates (Federal and Alberta)

27% / 12% / $500,000 / 50.7%

*          CCPC denotes, Canadian-Controlled Private Corporation.

**       Rates effective as of January 1, 2018.

 

Passive Income

If your corporation has passive income in excess of $50,000 per year, the company’s small business limit will be reduced by $5 for every $1 in excess of the $50,000 threshold.

 Examples of passive income may include:

·        Interest income, rental income, specified investment income, or capital gains on the sale of assets.

Exclusions may apply in certain situations.

 

Revised Income-Sprinkling Rules / Tax on Split Income

Draft legislation was released on December 13, 2017 resulting in changes to the rules surrounding income-sprinkling to family members. While splitting income may no longer be possible in some circumstances, there are a number of exceptions which may allow your corporation to sprinkle income.

 

Dividend Refunds

Dividends refunds may be generated through a payment of a dividend by a corporation with a balance in its Refundable Dividend on Hand (RDTOH) account. A second “eligible” RDTOH account has been introduced, and may change tax planning surrounding dividends issued by your corporation.

 

The changes noted above may be complex in nature, and may or may not apply to your corporation. Call us to setup an appointment to discuss how these changes may apply to your specific situation.

 

 

*The preceding information is for general education purposes only and deals with complex, time-sensitive, and dynamic matters that may not apply to particular situations. Information should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. Call our office to set up a meeting with us to discuss your personalized corporate tax needs.