Each year, the government adjusts existing tax credits and introduces new ones. These new introductions help taxpayers minimize their tax obligations and decrease the burden of necessary expenses, while also encouraging people (and businesses) to make a difference.
This year, there are four newly introduced tax credits and strategies for individuals and businesses to be aware of:
Individual taxpayers
Donations Tax Credit - Cultural Property
Individuals donating cultural property to designated institutions and public authorities benefit from an enhanced tax incentive. This is done for the purpose of ensuring cultural property in Canada remains in the country.
Previously, the property had to be of national importance to qualify for the credit, meaning that there would be a significant loss to national heritage if it were to be donated elsewhere. This is no longer the case, as of 2019, you can claim a credit on cultural property without it having national importance.
Medical Expense Tax Credit - Cannabis
If you purchased medicinal marijuana from a legal and licensed facility and kept the receipts for your purchases, you may be able to claim the cost as a medical expense on your income tax return for 2019.
It is also important to note that, because you can claim eligible medical expenses for any 12-month period ending in the current tax year, you can claim cannabis purchased in 2018, so long as it was after October 17.
Business owners
Scientific Research & Experimental Development (SR&ED) threshold is eliminated
In previous years, the SR&ED expenditure limit of $3,000,000, and in turn, the 35% enhanced tax credit was eroded for every dollar of taxable income in excess of $500,000 at a rate of $10. If taxable income exceeded $800,000 the limit was reduced to 0 and no enhanced credit was received.
As of March 19, 2019, this threshold has been removed. As a result, the only way that your refundable investment tax credit could be reduced is if the taxable capital of an associated group is over $10 million.
Incentives for the purchase of zero-emission vehicles
With an emphasis being put on protecting our environment, incentives have been introduced to encourage the purchase of zero-emission vehicles in Ontario.
From a business perspective, you can now depreciate zero-emission vehicles at a rate of 100% in the first year with no half-year rule applied. This will allow you to recognize tax savings sooner than you would if you purchased a non-zero-emission vehicle.
Note, the maximum amount that can be deducted is capped at $55,000 for vehicles that are not taxis, trucks or short-term leasing vehicles.
For more information on these changes and how they affect you or your business, contact our team of chartered professional accountants today.
