On November 10, 2017 the Ontario Ministry of Finance tabled their 2017 Budget. Highlighted in the Budget was Ontario’s plan to reduce the small business corporate income tax (“CIT”) rate from 4.5% to 3.5% effective January 1, 2018. This, in conjunction with the proposed Federal small business CIT rate reductions announced by the Federal Liberal Government on October 16, 2017, will bring the combined small business CIT rate to 13.5% and 12.5% effective January 1, 2018 and January 1, 2019, respectively.
This is good news for corporations subject to the small business CIT rate that plan to reinvest directly in their business, by reducing their immediate tax liabilities to allow for larger up-front investments. However, with reductions in the small business CIT rate comes increases on the related personal dividend income tax rates when the funds are ultimately withdrawn from the corporation by the owner. Contact our office to discuss how these changes might impact your business and your remuneration strategy.
For more details on the 2017 Ontario Budget you can visit https://www.fin.gov.on.ca/en/budget/ontariobudgets/2017/ .