New Mega Deduction a Good Start, But More Tax Reforms Are Needed

The Federal government has unveiled a Productivity Mega Deduction, which will provide immediate expensing under Capital Cost Allowance (CCA) provisions for a broad range of depreciable property, importantly on a permanent basis, for acquisitions on or after September 15, 2026. Check out the noteworthy exclusions are listed below. This tax reform is a good start, but much more needs to be done, especially for small business owners and average taxpayers to make Canada truly competitive across our tax base.

As predicted by bond rates, the interest rate due on overdue taxes and the prescribed interest rate for non-arm’s length loans remains unchanged for the third quarter of 2019. However, these interest rates still have a significant impact on 2019 tax planning, particularly for those who want to avoid undue balances owing to the CRA. Knowledge Bureau’s Income Tax Estimator can help taxpayers and their tax pros employ tax-efficient strategies that reduce income tax owing that could be subject to interest.

Employee stock options can help companies attract and retain talented employees by providing a supplementary source of compensation that is linked to the future success of the company. Current tax rules provide a preferential personal income tax treatment in the form of a stock option deduction, which effectively tax stock option income like capital gains. But that’s about to change, and advisors working with HNW executives need to come up to speed.

There have been several new tax and economic developments on climate change this month. Statistics on the Climate Action Incentive (CAI) payments became available, Albertans repealed their provincial carbon levy and the Final Report from the Expert Panel on Sustainable Finance was released.

For executives who are compensated in part with stock options, mid-summer tax planning will be especially important this year. The Notice of Ways and Means Motion, introducing draft legislation to implement a $200,000 limitation to the stock options deduction will take effect in 2020 for employees of large, mature, public companies. If your client is an executive in one, it’s important to schedule a tax planning discussion.

We’ve rarely been as excited as we are this year for the Distinguished Advisor Conference, and this is largely due to the incredible agenda, speakers, sponsors and networking activities we’re proud to share with you. Plus, you’ll save $100 on tuition fees if you register this month.

Knowledge Bureau designate Kristin Ramlal is a graduate of the RWM™ program, Distinguished Advisor Conference speaker, and a founding member of the new Society of Real Wealth Managers™. Her commitment to education is inspiring! Here is her story: