Budget 2018 - What's In It For You?
- Amy Gilpin
- Mar 2, 2018
- 2 min read
Well budget day has come and gone. Again, in my opinion, there seems to be very little in the federal budget to help everyday people in Canada.
Parental Leave
There are changes in the Employment Insurance program for parental leave, with the introduction of the new Employment Insurance Parental Sharing Benefit that will provide five extra weeks of ‘use it or lose it’ EI parental benefits when both parents share the leave. Should the budget pass, it will become effective in June 2019 for parents who use the traditional 12-month paternal leave program. For those who use the extended parental leave program of 18 months at only 33% of earnings, they can take an additional eight weeks. While I think this is good in theory, I’m not so sure how it will play out for families in practice. It does nothing to address the high costs involved in raising a child.
Passive Investment Income for Small Business
A passive income cap has been introduced for small incorporated businesses. While not quite as harsh as the originally proposed changes, it will still affect many middle-class Canadians. Passive income is obtained when profits are kept inside a business and invested in things like mutual funds. Many small business owners have used this as a way to save for their future, their children’s education, and other unexpected situations. Under the new rules, passive income under $50,000 per year will still be subject to the small business tax rate. Income above that amount will face increasingly higher taxes. If a business earns $150,000 per year in passive income, they will no longer be entitled to the small business tax rate. In particular, this will affect people like doctors, lawyers, accountants, and contractors. The new rules take effect for tax years beginning in 2019.
Canada Workers Benefit
The budget proposes to beef up the Working Income Tax Benefit by raising it by $170 per year beginning in 2019 and by increasing the income level cap at which it is phased out. Those with disabilities facing financial barriers to enter the workforce would receive an additional $160 per year through this supplement. It is expected that this will affect about 300,000 low-income workers.
It’s not much, considering how much this government loves to spend our tax dollars. In fact, I think there is very little good news in this budget for the average Canadian. Let me know what you think, and how the proposed tax changes will affect you or your business.
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