Job Opportunity

We’re Growing Again!

Langille & Company is looking for a bookkeeper/receptionist to join our team.

We are a small, but growing team taking care of the business, accounting and tax needs of small to medium sized businesses and Non-profit groups. Our approach has been so well received that we need more help.  This position will start part-time, but is anticipated to grow to full time in early 2017.

We are looking for a friendly and energetic person, who works hard and loves what they do.

Required skills would include Sage 50, Quickbooks, Quickbooks Online, Microsoft Office Suite and an exceptionally personable telephone manner. Familiarity with Caseware and Profile would also be an asset.

We are a family-oriented team and we value volunteerism so flexibility is not only offered, it’s encouraged.

Our clients and the service we provide are extremely important to us so we are looking for the very best fit – if you believe that you are that person please forward your resume to jerad@langilleandcompany.ca – I look forward to hearing from you!

Budget 2016

Budget 2016

The Trudeau government finally introduced its first budget this week, and it was arguably the most awaited budget in over a decade. The Liberals had made many promises during their campaign, but during recent weeks they hinted that some would be delayed, some would be modified, and the deficit, originally promised at $10 Billion, had skyrocketed to almost $30 Billion.

There are many infrastructure programs that are initiated or accelerated with this budget, notably dedicated funding to increase the quality of health care, education and infrastructure on First Nations’ Reserves, improvements to mass transit in places like Toronto and Montreal and investment in “Green” technologies across the country. While these are important components of Budget 2016, this examination deals primarily with tax issues that are likely to interest regular readers of this blog.

Families

On a smaller scale, Canadians have been waiting anxiously to learn about the current government’s revamp of the Child Tax Benefit and Universal Child Care Benefit. The campaign promise was to scrap the existing program entirely, make the payments non-taxable and stop “giving money to millionaires”.  The newly-unveiled Canada Child Benefit (CCB) allows for annual payments of up to $6,400 per year per child, for children under the age of six, and payments of up to $5,400 per year per child, for children ages six through eighteen.  As promised these payments will not be taxed and when the family’s combined income exceeds $30,000 the payments will be gradually clawed back so that at a combined income of $190,000 the benefit is entirely eliminated.  Interestingly the clawback is accelerated the more children a family has.  For instance a family with one child and a combined income of $50,000 will lose 7% of their benefit, while a family with a similar income and four children will lose 23% of their benefit.

These changes will come into effect with the July 2016 payment and will be based on the family’s 2015 combined income.

The Family Tax Cut, or income splitting for families, was eliminated as promised. This does not affect a family’s ability to claim this credit for 2015, nor does it affect the ability of seniors to split pensions between spouses going forward.

A bad-news surprise was the reduction in Children’s Fitness and Arts credits by 50% each from $1,000 to $500 and $500 to $250 respectively. This measure affects the 2016 tax year.

Education

Education received mixed treatment under this budget on a local level.

The good news is that teachers are now able to claim tax credits for supplies they purchase personally. This recognizes the long standing situation where teachers are investing in our children out of their own pockets.

The bad news is that as of January 1, 2017 university students will no longer get Education and Textbook credits. These credits were given in addition to tuition credits to recognize that a significant portion of a post-secondary education is made up of non-tuition expenses.  Tax credits will still be given for tuition and any unused Education and Textbook credits that are being carried forward will not expire.

Small Business

The Small Business Tax rate had previously been reduced from 11% to 10.5% and there was a range of speculation on this from a reduction to 9.5% to an increase to 12%. In the end the small business rate remained the same.

The small business rate is available to qualifying small business corporations in Canada on profits of less than $500,000 and there are some specific rules designed to ensure that no one person or group is accessing more than their fair share. These rules were adjusted to close some perceived loopholes, but most taxpayers should not see any changes.

The treatment of goodwill for tax purposes has changed slightly but the changes are more to simplify things and make the treatment more consistent with other capital asset purchases for business than to change the tax policy. These changes will take effect January 1, 2017.

From a tax perspective there wasn’t much in the way of good news in this budget, but then not much was expected. The uncertainty is over and now we can start planning for the next few years.  If you have questions on how the budget changes will affect you and your family please give us a call.

Update on Federal Liberal Tax Plans

This last summer during the federal election Justin Trudeau campaigned on a large number of promises to Canadians and they responded by granting him a majority government with a mandate to make good on his intentions to affect “Real Change”.

One area that got a lot of attention during the election campaign was Mr. Trudeau’s approach to taxation and social benefits. His campaign talked about a middle class tax break, the elimination of the Family Tax Cut, the addition of a new ‘top-tier’ tax bracket for those individuals earning in excess of $200,000 per year, clawing back the contribution room increases on Tax Free Savings Accounts, a review of professional corporations and the small business tax rate, and a revamping of social benefits paid to parents currently running as Child Tax Benefits and the Universal Child Care Benefit.

Campaign platforms from all parties are normally long on rhetoric and promises and short on details so shortly after the election was over I started to receive questions from clients about how and when these measures would be implemented. Obviously it was far too early tell anything for sure other than it was too late in the 2015 taxation year to do anything that would affect the plans that Canadians already had in place for 2015 and we would have to wait until Parliament sat again to find out more details.

On December 7th the Honourable Bill Morneau, Trudeau’s Minister for Finance, sat down with CBC and talked about how some of his plans were shaping up.

Canada Child Payments

Mr. Morneau indicated that the new payment system would replace the existing two systems (Child Tax Benefit and Universal Child Care Benefit), that the payments would be tax-free and that they would start effective July 1, 2016. Historically July 1st each year is when the government has implemented any changes to these programs introduced over the previous year.

Tax Free Savings Accounts

Minister Morneau also reinforced that the Liberal government would keep its promise to roll back annual increases to the TFSA contribution room announced by the Conservatives in 2014. When asked he clarified that the contribution room that has been granted up to this point will not be taken away, but starting in 2016 new room granted would be reduced back down to $5,500 in 2016 and indexed to inflation thereafter.

Tax Rate Adjustments

Mr. Morneau confirmed the government’s intention of reducing the so-called “Middle-class” tax rate of 22% to 20.5% and introducing a new top-tier income tax rate of 33% for those earning more than $20,000 for the 2016 tax year. He was forthright when acknowledging that these measures were no longer seen to be “revenue neutral” as they had been advertised throughout the election. In the aggregate they will cost $1.4 billion more than they will recover in 2016. This would seem to put the overall budget projections of a $10 Billion deficit for each of the current government’s first two years in jeopardy, though when asked Mr. Morneau would neither confirm nor deny this.

Not mentioned by Mr. Morneau during the interview is that this tax break benefits everyone who makes between $45,000 and $222,000 and not just the “middle-class”. A taxpayer making $195,000 will save approximately $680 (1.5% of their income between approximately $45,000 and $90,000) where a taxpayer who only makes $60,000 will save approximately $225. A couple each making $40,000, or around $20/hour, will see no savings at all, but presumably they will benefit more from the new Canada Child Credit.

With the introduction of the new 33% Federal Tax bracket we now have ten separate tax brackets in British Columbia (the province having its own full set of brackets that does not coincide with the federal set). The top British Columbia bracket is 16.8% which means that British Columbians in the new top bracket will be facing a marginal tax rate of 49.8%.

The Justin Trudeau Liberals seem to be very intent on living up to the promises they made to Canadians which is encouraging to hear, though how much this will ultimately cost still remains unclear. There are many promises left to address and I suspect we will see more of these small informational interviews as we near the spring and Mr. Morneau’s first budget address.