Following are some of the business and personal tax changes resulting from the 2019 federal budget:
Business tax changes
Zero emission vehicles
The budget provides an enhanced first year CCA rate of 100% on zero emission vehicles. Two new CCA classes will be created:
- Class 54 for zero-emission vehicles otherwise included in class 10 or 10.1 (i.e. passenger vehicles)
- Class 55 for zero-emission vehicles otherwise included in class 16 (i.e. taxi cabs, short-term rental vehicles, and trucks designed for hauling freight)
With respect to class 54 the amount on which CCA can be claimed will be limited to $55,000 (plus sales tax)
Scientific research and experimental development (SR&ED) credit
Under the current rules certain Canadian Controlled Private Corporations (CCPCs) qualify for a 35% SR&ED refundable tax credit on up to $3 million of annual qualifying expenditure. This annual expenditure is phased out when:
- Taxable income for prior year is between $500,000 and $800,000, or
- Taxable capital employed in Canada is between $10 million and $50 million
The budget proposes to repeal the use of taxable income as a factor in determining the annual expenditure limit; government’s intention is to boost corporate innovation.
Personal tax changes
Canada training credit
For 2019 and subsequent tax years the budget introduces a refundable tax credit to cover half of tuition fees associated with training. This credit allows individuals to accumulate $250 each year (up to a maximum of $5,000 over lifetime) in a notional account. To be eligible an individual must file a tax return for the year, be between 25 and 65 years of age, have earnings of $10,000 or more not exceeding net income of $147, 667 in 2019 (indexed annually).
Eligible fees include:
- Tuition fees
- Ancillary fees and charges (i.e. admission fees, exemption fees and charges for a certificate, diploma or degree)
- Examination fees
Home buyers’ plan
In an effort to make housing affordable for Canadians, the budget proposes to provide first time home buyers with greater access to their RRSP savings to buy or build a home. The budget proposes to increase the home buyers’ plan (HBP) limit from $25,000 to $35,000. This potentially allows a couple to withdraw up to $70,000 from their RRSPs to buy their first home.
For professional advice contact Alpha Accountzy, Accounting & Tax Solutions.