Rates and Limits
As expected, several tax rates and limits are changing for 2019.
- Federal and provincial income tax brackets are being increased (due to inflation).
- Employment Insurance (EI) Premiums are being decreased. The EI rate is being reduced from 1.66 percent in 2018 to 1.62 percent in 2019.
- Maximum pensionable earnings, the amount used to calculate Canada Pension Plan contributions for the year, will increase to $57,400 in 2019, up from $55,900 in 2018. Likewise, the employee and employer contribution rates for 2019 will increase by 5.1 percent from 4.95 percent in 2018.
- If you’re a recipient of the Canada Child Benefit, then we have some good news: the Benefit will be indexed to inflation going forward. That means you don’t have to worry as much about your purchasing power falling each year.
Working Income Tax Benefit Renamed and Enhanced
The Working Income Tax Benefit is a refundable tax credit that helps give tax relief to low-income individuals and families to encourage them to participate in the workforce. The Working Income Tax Benefit is being renamed the Canada Workers Benefit. But that’s not all. It will be enhanced beginning in 2019 and indexed (increased with inflation) thereafter. (Similar enhancements will be applied to the Canada Workers Benefit disability supplement.)
Under the Working Income Tax Benefit in 2018, single individuals without children were eligible for a maximum benefit of $1,059, while families were eligible for a maximum benefit of $1,922. Those maximum amounts are being increased under the Canada Workers Benefit in 2019 to $1,355 for individuals and $2,335 for families, respectively.
To make your tax filing life easier, the CRA will automatically determine if you’re eligible to receive the Canada Workers Benefit and assess your tax return as if you’ve already claimed it, even if you hadn’t on filing. If you’re an eligible couple making the claim, the CRA will designate the partner who is to receive the benefit.
New Limited Program for Tax Avoidance
Changes have been made to the Voluntary Disclosure Program (VDP). If you’re unfamiliar with the VDP, it’s a program to encourage Canadians who may not have been completely honest about their tax situation in the past to come forward. If your application to the VDP is accepted, you’ll be required to pay the taxes you owe, plus interest (partially or fully). However, you may be eligible for relief from prosecution or penalties that you’d normally face.
The changes that came into effect March 1, 2018 apply to taxpayers who purposely avoided their tax obligations. If that’s you, you’re now able to apply under a new “Limited Program” and face a lesser penalty.