Friday, December 28, 2018
Canada's small business tax rate will be reduced from 10 percent to nine percent from January 1, 2019, as part of a suite of new year tax changes.
The rate was previously reduced from 10.5 percent in January 2018.
The federal Government said that, thanks to this reduction, the combined federal, provincial, and territorial average income tax rate for small business will be 12.2 percent. It said this rate is the lowest in the G7 and the fourth lowest among members of the OECD. The measure should save small businesses up to CAD7,500 (USD5,556) in federal taxes a year.
The taxation of non-eligible dividends – generally dividends distributed from corporate income taxed at the small business rate – will be adjusted to reflect the reduction in the small business rate.
Canada's Fall Economic Statement also included new write-off and investment incentives, to be effective from January 1, 2019.
The Government will allow businesses to immediately write off the full cost of machinery and equipment used for the manufacturing and processing of goods, as well as the full cost of specified clean energy equipment. It will introduce an Accelerated Investment Incentive, to allow businesses of all sizes and in all sectors to write off a larger share of the cost of newly acquired assets in the year the investment is made.
Other tax changes taking effect in 2019 include: