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What Everybody Should Know About Doug Ford’s Tax Change

What Everybody Should Know About Doug Ford's Tax Change

Joanne and I, and 80 other entrepreneurs spent two days at the Rock Star Entrepreneur Summit in Oakville.

Over the past few years, I’ve attended at least five different conferences. I’m just blown away by how practical the information is shared by Tom & Nick!

If you are an entrepreneur or entrepreneur wannabe, this is a conference that you cannot miss. 😊

I am going to share some lessons I’ve learned from the conference next week. (I still need to review all my notes to nail down my to-do list over the next year!)

So Doug Ford, eh?

As a small business owner, we only had one choice, even though it is much less than perfect.

(For the real estate investors out there, if you don’t know already, NDP proposed to have rent registry so tenants would know how much the previous tenants were paying and hence limit the ability for the landlord to raise the rent. ☹) Less of two evils. Doug Ford is lesser of the two evils at least.

Now that he’s elected, what does it really mean to you and me?

For corporations:

  • The general rate is going to decrease from 11.5% to 10.5%.

Currently the combined Federal and Ontario general rate is 26.5% (Federal = 15% and Ontario = 11.5%). Doug Ford promised that he would decrease the provincial rate by 1%, the new combined general rate is 25.5%.

  • The small business tax rate will be going from 3.5% to 3.2%.

As many of you know, the small business tax rate is currently 13.5% in 2018 in Ontario. Federal portion is 10%, and Ontario portion is 3.5%. Doug Ford promised that he would further decrease the small business tax rate from 3.5% to 3.2%.

For individuals:

  • Tax rate reduction will apply to the earning between $42,960 and $85,923. Maximum saving per person is $786 per year.

For those of you who do not know about our Canadian progressive tax system, you can refer to this blog post to understand it a bit better.

This CBC link provides a good example:

… the average Ontario worker earns a taxable income of $53,000. Under the current rate of 9.15 per cent, that worker pays $2,565 in provincial income tax. With a rate of 7.32 per cent, as promised by Ford, that same worker would pay $2,380, saving $185 per year — the equivalent of a 7.7 per cent cut.

A worker making $80,000 annually pays $4,360 in provincial income tax. Under a PC government, that figure would be $3,680, saving $680 per year, equal to a 15.6 per cent reduction in provincial income tax.

  • Scraping income tax for minimum wage workers, instead of increasing the minimum wage from $14 to $15 as promised by the Liberals
  • 75% refundable tax credit for childcare for children between age 0 – 15. Lower income family will benefit the most from this tax credit. Families with income over $150K will be receiving only 26% credit.
  • Lower gas taxes by 10 cents a litre. Instead of $1.30 a litre we see every day, you are going to see the price tag going down tow $1.20.

For my Honda Odyssey, we spend $90 every other week on gas. This is equivalent to a saving of $7 every other week and a saving of $180 per year for my vehicle.

  • Cutting hydro rate even more than the Liberals promised

The tax cut is generally a good thing to stimulate the economy by encouraging spending. The only thing is nobody really know when all these tax cuts will be implemented or how these will be funded.

We will keep an eye on these tax change in the coming four years.

Until next time, happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

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