Along with the personal tax measures discussed in our previous two blogs - 2019 Federal Budget Commentary: Tax Changes for the Individual Canadian and 2019 Federal Budget Commentary: Personal Income Tax – Housing - the federal government is proposing a number of benefits, credits and provisions that will assist working individuals, especially those seeking to enhance their skills through training.
To help individuals cover the cost of tuition and fees associated with training, the government proposes to introduce a new refundable tax credit that will cover up to half the tuition and fees associated with training.
Under the program, eligible individuals will accumulate $250 each year, starting in 2019, up to a lifetime maximum of $5,000.
To accumulate the $250 in a given year, you must be a Canadian resident between 25 and 65 years old, file a tax return, have qualifying working income of at least $10,000 and have a net income less than $147,667. Accumulation will begin in 2019 for eligible individuals and claims will begin in 2020.
Employee Stock Options are a taxable benefit that is added to an individual’s income for the year. Unlike other taxable benefits, stock options receive preferential tax treatment where, in certain situations, employees are able to deduct half of the taxable benefit resulting from the acquisition of stock under the option and in turn pay half the tax.
Under the new budget, employees of “large, long-established, mature firms” will only be able to take advantage of the reduced taxable benefit on shares that do not exceed an annual cap of $200,0000 on stock-option grants.
Start-ups and growing companies will not be subject to these new rules as stock options, as the government sees stock options as a tool for these types of businesses to create jobs, attract talent and continue to grow without having to pay out large salaries that they may not be able to afford at the implementation and growth stages.
Additional information should come available later this year.
The 2019 Federal Budget proposes a new Employment Insurance (EI) Training Support Benefit, to be launched in 2020, that will provide income support to workers requiring time off for skills training. The benefit will provide eligible workers up to four weeks of income at a rate of 55% of their weekly earnings.
To help offset this new training benefit, small businesses that pay $20,000 or less in premiums per year would be eligible for a rebate.
In addition to the above benefits, the budget proposes a new leave provision that will protect workers who wish to take time off to pursue skills training.
To further support the Canadian Journalism industry, the federal budget proposes a temporary tax credit for digital news subscriptions. Individuals will be able to claim up to $500 in costs associated with eligible digital subscription for a tax credit of 15% (maximum $75 annually).
For more information on these proposed changes and how they will affect you tax planning strategy, contact us today.