Small businesses should cheer the 2015 Budget.
It features lower overall tax rates and breaks for private company share donations, says Jamie Golombek, managing director of Tax and Estate Planning at CIBC Wealth Advisory Services.
“If you’ve got appreciated real estate or appreciated private company shares,” he says, “as long as you donate the proceeds of the sale on disposition within 30 days, you won’t have to pay capital gains tax at all on the portion of the gain allocated to the charity.”
But he warns the new rules apply to dispositions after 2016, “so don’t [donate] right away as they’re not yet effective.”
The federal small business tax rate is also going down. It’s currently 11%, and will be reduced by increments of 0.5% each year until it reaches 9% in 2019. The gross-up factors and dividend tax credit factors will also change, he says. (Read more here.)
The budget also lowers EI premium rates starting in 2017. “In 2017, the government will implement a seven-year breakeven mechanism, so premiums won’t be higher than what’s needed to pay for the program over time,” says Golombek. Any surplus will be returned to employees and employers through lower future rates.
“This is expected to result in a significant reduction in the EI premium rate from $1.88 in 2016 to an estimated $1.49 in 2017. That’s a drop of about 20%.”
Other Budget 2015 changes Golombek points to:
- The TFSA limit is now $10,000, but he cautions “that will stay that way for years going forward, since they’ve eliminated the inflationary increases.” Read more here.
- RRIF minimum withdrawal rates have been lowered for people age 71 and older. Read more here.
- The T1135 is simpler for people with foreign property between $100,000 and $250,000. Read more here.