An Introduction to The Certainty of Taxes
In this life, there aren’t many things that are certain, but taxes are surely one of the things that will be there throughout your life. While taxes themselves are the basic duty of each and every citizen towards their own Government, there are many types of Business Tax put on Businessmen and employees. Some of which include Income Tax and Carbon Tax, as well as others, most of which spell trouble for both employees and Business owners. Canada Small Business Tax Changes have been keeping a lot of Small Business owners up and worried.
Just like every year, there were good changes to the tax system, combined with other changes that spell out extra expenses for Business owners and employees. While most of these changes wouldn’t affect large Businesses, they certainly make quite an impact for smaller Businesses, as small Businesses do not have the financial freedom possessed by most large organizations.
The Addition of New Taxes
The addition of new kinds of taxes is already seen as troublesome. As even most large businesses would have trouble with the addition of new kinds of taxes. Which understandably becomes that much worse for small businesses, as new taxes could reduce the income of the company by a significant amount. While it is true that large Businesses would face a setback, new kinds of taxes could decimate entire small companies, as their revenue stream can be affected seriously.
Tax Changes in Canada in 2019
Canada had a slightly lower than mediocre year of Business in 2018, as while the market did grow to some extent, it was below the market expectation of a growth of 3%. The Canadian Government also faced a shortage of funding in many places, and this is one of the reasons there are several changes in Canada’s Tax system made during the beginning of 2019. There’s good news as some have been reduced, but there is just as much, if not more, bad news since some taxes have been added on top of existing ones, while others have just been increased. Read on to find about more about the changes made to Canada’s Tax System in 2019:
- The Reduction of Small Business Tax Rate
This is one of the very best pieces of news you will find here, and has undoubtedly made a lot of people happy, as the Small Business Tax Rate has been reduced. This means that most small business owners will now be able to get more revenue, and won’t have to shut the company down due to lack of profits. The Small Business Tax Rate was decreased from a whopping 10% to an acceptable 9%, and this fact has left a lot of Canadian Business owners happy.
This will make operations easier for a lot of small Businesses, as that 1% is the make or break factor for a lot of businesses who have restricted financial freedom.
- Cutting Revenue Eligible For Small Business Tax Rate
This is one of the worst pieces of news and will undoubtedly bring a grimace to those who have been saving for a large purchase. From 2019 on, every single dollar above the base number of $50,000 that one earns from passive income sources will cut the revenue eligible for the Small Business Tax Rate by a total of five dollars. This means that every dollar one earns above 50,000 will bring one to a higher tax bill.
As one may guess, this has proven to be a devastating piece of news for small Businesses, as there is no limit on how far the tax bill can go.
- Lower EI Payments
Canada has been seeing some of the lowest unemployment rates it has seen in years, and this is the reason why the EI payments have been reduced for everybody, with employees having to pay just 4 cents per $100 of their earnings.
- CPP Has Been Increased
CPP is one of those things that are both a blessing and a curse, and you will have trouble deciding which. The government has decided to increase CPP contributions over the next seven years. But ultimately, this boils down to a fairly good deal for the employees. It’s true that the amount they have to contribute for CPP is higher, but it also means that they will be able to receive one-third of their average earnings when they want.
- Carbon Tax
This is undoubtedly a confusing one, as everybody has their very own opinions on the implementation of Carbon Tax. The Government is pushing for all companies to use Carbon Tax, as the Government will start taxing those regions which are not using Carbon Tax or some other form of Carbon Pricing. Basically, what the changes allow you to do is write off three things: the full cost of manufacturing machinery and processing goods, specified clean energy equipment, and to also write off the larger share of assets earned in the year the investment is made.
