With the new year, tax changes are on the way for Canadians for both regular people and small businesses.
The changes coming are mostly to small businesses, such as new income-splitting rules and holding passive investments in your private corporation.
Brian Golly with Smart investing said one change for the every day person is to the tax-free savings account.
“This year, because of inflation, the government announced a couple of weeks ago that they’re going to increase the annual contribution for the Tax-Free Savings Account up to $6,000 starting January 1, 2019,” Golly said. “Basically, life-time contribution into a TFSA as of January 1 will be $63,500.”
Golly said income splitting rules will be changing for small businesses in 2019.
“If you have a spouse or a family member working in your small business with you, and they aren’t, in the government’s eyes, fully contributing to the growth of the business,” Golly said. “Any income that you would split with either the spouse or the children could be taxed at the highest possible tax rate in Canada.”
Golly said investment may be a little uneasy to start 2019 in reaction to the year that was.
“Investment decisions are always emotional, and obviously some people will see the headlines, and see the news, and maybe take a pause, and all those type of things,” Golly said. “Our investment philosophy is again, understand what we own, make sure that we’re owning quality, and make sure we’re very careful with price, in regards to the price that we buy things at and also sell things at.”
Those who have additional questions about their finances heading into the new year should contact their accountant or financial adviser.