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TAX BULLETIN - ARCHIVES 2016
  • Logbook

  • Reporting the sale of your principal residence for individuals (other than trusts)

  • Interest rates for the fourth calendar quarter

  • Interest rates for the third calendar quarter

  • Interest rates for the second calendar quarter

  • Extracts from the Budget in Brief from the Minister of Finance of Canada:

    • On December 7, 2015, as one of its first actions, the Government cut taxes for nearly 9 million Canadians by reducing the second personal income tax rate to 20.5 per cent from 22 per cent.

    • The Canada Child Benefit will provide a maximum annual benefit of up to $6,400 per child under the age of 6, and up to $5,400 per child aged 6 through 17. Payments to families will begin in July 2016

    • Budget 2016 will ensure that post-secondary education remains affordable for students from low- and middle-income families and that debt loads are manageable.

    • To reduce the period of time that out-of-work Canadians are without income, Budget 2016 proposes to reduce the EI waiting period from two weeks to one week, effective January 1, 2017.

    • Phase 1 of the Government’s long-term infrastructure plan provides $11.9 billion over five years to immediately invest in the infrastructure Canadians need—to modernize and rehabilitate public transit, water and wastewater systems, provide affordable housing, and protect infrastructure systems from the effects of climate change.

    • Extract from Supplementary Information: Budget 2016 proposes that the small business tax rate remain at 10.5 per cent after 2016. In order to preserve the integration of the personal and corporate income tax systems, Budget 2016 also proposes to maintain the current gross-up factor and DTC rate applicable to non-eligible dividends (generally, dividends distributed from corporate income taxed at the small business tax rate).

  • Extracts from The Québec Economic Plan:

    • The Economic Plan 2016-2017 provides for an additional reduction in the HSF contribution for all Québec SMBs starting on January 1, 2017. The rate applicable to businesses with a payroll of $1 million or less will gradually be reduced by 2021, i.e. from: 1.6% to 1.45% for the primary and manufacturing sectors; 2.7% to 2.0% for the service and construction sectors.

    • Reduction from 8% to 4% for primary and manufacturing sectors SMBs.

    • As of the day after Budget Speech 2016-2017, entrepreneurs who sell their business to a non-arm’s length person will be able to benefit from favourable tax treatment with respect to capital gains.

    • To encourage SMBs in manufacturing and primary sectors to integrate high value-added software into their business process, a 20% tax credit is being offered for fees incurred on contracts awarded for the integration of management software packages.

  • 2016 Automobile Deduction Limits and Expense Benefit Rates for Business

  • Interest rates for the first calendar quarter

  • EI premium rates and maximums

  • Rates, Thresholds and Amounts Related to Source Deductions and Contributions for 2016

  • Comparison of the tax impact of a salary vs a dividend:

    Income Tax Bracket       $ 1 Salary vs Dividend 2
    Salary Dividend Advant. Div.
    Company Shareholder Company Shareholder
    Inc  Bef Sal Sal Ben 3 Sal Inc Tx 1 Ben 3 Net Inc Bef Sal Inc Tx Div Div Inc Tx 1 Net
    11 327 100.00 -90.41 -9.59% 90.41 -12.53% -5.87% 73.77 100.00 -18.5% -81.50 81.50 -3.92% 78.31 4.54
    14 281 100.00 -90.41 -9.59% 90.41 -28.53% -5.87% 59.31 100.00 -18.5% -81.50 81.50 -14.49% 69.69 10.38
    41 935 100.00 -90.41 -9.59% 90.41 -32.53% -5.87% 55.69 100.00 -18.5% -81.50 81.50 -19.21% 65.84 10.15
    44 701 100.00 -90.41 -9.59% 90.41 -38.37% -5.87% 50.41 100.00 -18.5% -81.50 81.50 -26.10% 60.23 9.82
    83 865 100.00 -97.30 -2.70% 97.30 -42.37%   56.07 100.00 -18.5% -81.50 81.50 -30.82% 56.38 0.31
    89 401 100.00 -97.30 -2.70% 97.30 -45.71%   52.82 100.00 -18.5% -81.50 81.50 -34.76% 53.17 0.35
    102 040 100.00 -97.30 -2.70% 97.30 -47.46%   51.12 100.00 -18.5% -81.50 81.50 -36.83% 51.48 0.36
    138 586 100.00 -97.30 -2.70% 97.30 -49.97%   48.68 100.00 -18.5% -81.50 81.50 -39.78% 49.08 0.40

    1  Extracts from CCH Tax Reference Booklet 2015-2016.

    2 Taking into account the company income tax rate of 18.5% in 2016 and the cost of salary benefits 3 , assuming also that $100 before tax is available in the company for distribution to its shareholders owning 40% or more of shares ,  the dividend  is more beneficial. Note also that the advantage of the dividend would be higher for a shareholder owning less than 40% of shares due to the fact that he must contribute to EI.

    3 The cost of salary benefits of 5.5873% for the employee and 9.592% for the employer  in 2015 details as follows: QPP 5.325% for the employee and 5.325% for the employer  up to $54 900, QPIP 0.548% for the employee and 0.767% for the employer up to $71 500, QHIP 2.7% for the employer & CNT for the employer up to $71 500 but not taking into account EI of 1.88% for the employee and 2.6% for the employer.

  • Extract from CCH Tax Reference Booklet 2015-2016

    Personal Income Tax Rates - Québec (2015)
    Income Tax Bracket       $ Effective Rate         Marginal Rate
    % Interest & Ordinary Income  % Capital Gains % Canadian Dividends
    Eligible      % Non-Eligible %
    11 327   0.00 12.53 6.26 -0.02 3.92
    14 281 2.59 28.53 14.26 5.64 à 5.66 14.49
    41 935 19.69 32.53 16.26 11.16 à 11.18 19.21
    44 701 20.49 38.37 19.19 19.22 26.10
    83 865 28.84 42.37 21.19 24.74 30.82
    89 401 29.68 45.71 22.86 29.35 34.76
    102 040 31.66 47.46 23.73 31.77 36.83
    138 586 35.83 49.97 24.98 35.22 39.78
Corporate Income Tax Rate - Québec (12/31)
  2016 2015
% %
Income eligible to SBD 18.50 19.00
Investment income of a CCPC    
 Net of dividend tax retund 19.90 19.90
 Without dividend tax refund 46.57 46.57
Other income 26.90 26.90