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Category: Personal Tax Post Date: January 5, 2018

2018 Tax Rates Update for Your Business

As we have just entered the New Year, it is a good idea to become familiar with the updated 2018 tax rates as the rates may impact the financial decisions you make for you and your business. We will cover the updated rates for GST/HST, corporate income tax, Canada Pension Plan (CPP) and Employment Insurance (EI).

GST/HST Rates

Goods and services tax and harmonized sales tax (GST and HST) are consumption taxes charged on most goods or services provided to consumers. GST is a 5% consumption tax levied by the federal government that is applicable to each province. HST is a combined federal and provincial consumption tax that is applicable to Ontario, Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador. Provinces such as British Columbia, Manitoba, Quebec, and Saskatchewan do not charge HST, however, these provinces levy their own provincial sales tax such as PST, RST, and QST. Alberta, Nunavut, and Northwest Territories charge GST only.

Province Effective for 2018 Remark
Alberta 5%
British Columbia 12% Includes 7% PST
Manitoba 13% Includes 8% RST
New Brunswick 15% HST
Newfoundland and Labrador 15% HST
Northwest Territories 5%
Nova Scotia 15% HST
Nunavut 5%
Ontario 13% HST
Quebec 14.975% Includes 9.975% QST
Prince Edward Island 15% HST
Saskatchewan 11% Includes 6% PST
Yukon 5%

 

Corporate Tax Rates

The corporate tax rates will differ depending on the status of your corporation. Below you can see comparison between the general corporate tax rates and small business corporate tax rates for a corporation that qualify for Small Business Deduction (SBD). As part of the Fall Economic Update, the federal government released draft legislation on October 24, 2017 proposing to lower the federal small business tax rate to 10% effective January 1, 2018. Since the change is not substantially enacted, the small business corporate tax rates below do not reflect the proposed legislation. It is important to know that the rules surrounding the eligibility for SBD are complex. You should consult with your accountant to determine which corporate tax rates are applicable to your business.

Province General Corporate Tax Rates for 2018 Small Business Corporate Tax Rates for 2018
Alberta 27% 13%
British Columbia 27% 13%
Manitoba 27% 11%
New Brunswick 29% 13.5%
Newfoundland and Labrador 30% 14%
Northwest Territories 26.5% 15%
Nova Scotia 31% 14%
Nunavut 27% 15%
Ontario 26.5% 14.5%
Quebec 26.7% 19%
Prince Edward Island 31% 15.5%
Saskatchewan 26% 13%
Yukon 27% 13%

 

CPP Contribution Rates, Maximums and Contributions

As we all know, the Canadian Pension Plan (CPP) is responsible for paying those who are either retired or disabled. It is funded by contributions made by both the employer and the employee at 4.95% of maximum contributory earnings of $52,400. Employees are entitled to non-fundable tax credit and employers can claim a tax deduction for every dollar of CPP contributions made. Starting in 2018, the updated CPP rates and maximum contribution are as follows:

Year Maximum Annual Pensionable Earnings Basic Exemption Amount Maximum Contributory Earnings Employee and Employer Contribution Rate (%) Maximum Annual Employee and Employer Contribution Maximum Annual Self-Employed Contribution
2018 $55,900 $3,500 $52,400 4.95% $2,593.80 $5,187.60

 

EI Premium Rates and Maximums

            Employment insurance (EI) provides temporary financial assistance to individuals who have lost their jobs, unable to work due to illness, or to those who cannot work because they need to care for a young child. Starting in 2018, the updated EI rates and maximum premium are as follows:

            Year Maximum Annual Insurable Earnings Rate (%) Maximum Annual Employee Premium Maximum Annual Employer Premium
2018 $51,700 1.66% $858.22 $1,201.51

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