Finance Minister Bill Morneau tabled the federal government’s 2017 fall economic statement on October 24. The fiscal and economic update generally reflected Canada’s strong economic growth in the first half of 2017 and a lower-than-expected budget deficit.
What was not included?
The finance minister did not release any new information about the proposed tax changes affecting private corporations further to what was previously released on July 18, 2017, and through the week of October 16, 2017. For details on those announcements, please review our coverage on our MD Blog.
We still expect the government to table legislation on the changes to income sprinkling announced on October 16, 2017, with the intent that these changes will take effect January 1, 2018.
We are also expecting further information in the coming months about the proposed tax changes affecting private corporations.
What was included?
As part of its fall economic statement, the government proposed legislation to amend the Income Tax Act to accomplish the following:
- Reduce the small business tax rate to 10% effective January 1, 2018, and further to 9% on January 1, 2019, as promised by Minister Morneau in his previous announcement on October 16, 2017. As expected, with a reduction in the small business tax rate, there will be a corresponding increase in the tax rate on non-eligible dividends.
- Accelerate the indexation of the Canada Child Benefit to July 1, 2018, from its current planned date of July 1, 2020. This will result in an approximate $200 increase in benefit received per child by 2019 for those entitled to the full benefit. There were no changes to the way the Canada Child Tax Benefit is calculated.
MD Financial Management will continue to monitor the Department of Finance announcements. In the meantime, we encourage you to stay in touch with your MD Advisor and tax advisor, who can help you understand the potential consequences of these changes for your financial plan.