Each year various tax rates, contribution limits, benefit amounts and deduction rates change. The following is a quick reference guide for 2018.
Personal income tax rates and brackets:
Taxable income Rate
$0 to $46,605 15%
$46,606 to $93,208 20.5%
$93,209 to $144,489 26%
$144,490 to $205,842 29%
Income over $205,843 33%
After many years of having a single tax rate in Alberta, we now have the following tax brackets:
Taxable income Rate
$0 to $128,145 10%
$128,146 to $153,773 12%
$153,774 to $205,031 13%
$205,032 to $307,547 14%
Income over $307,548 15%
Determine which bracket your taxable income falls into and add the Alberta tax rate to the Federal tax rate above for your total tax rate.
Corporate Tax Rates
Small business income up to $500,000 12%
Active business income over $500,000 27%
Investment income 50.7%
Dividend Gross up:
When a corporation pays a dividend, they must calculate the taxable amount of the dividend by multiplying the actual dividend amount by a certain percentage. This is the dividend gross up.
In 2018, the gross ups are:
Non-eligible dividends will be grossed up 16%. (1.16)
Eligible dividends will be grossed up 38%. (1.38)
CRA Prescribed Interest Rates:
Interest must be calculated on interest free and low-interest loans to shareholders and employees. The prescribed rate of interest is:
1% for the first quarter of 2018. It was 1% for all 4 quarters of 2017.
Contribution Rates and Limits
CPP and EI:
CPP maximum pensionable earnings are $55,900 for a total maximum contribution of $2,593.80 for employees and $5,187.60 for self-employed individuals.
EI maximum insurable earnings are $51,700 for a total premium of $858.22 for employees. The employer maximum is $1,201.51.
RRSP contribution limit for 2018 is $26,500.
TFSA contribution limit is $5,500. Lifetime limit as of January 1, 2018 is $57,500.
RPP contribution limit is $26,230.
DPSP contribution limit is $13.250.
Old Age Security Claw Back
If your net income exceeds $75,910 in 2018 ($74,788 in 2017) you have to repay part or all of your OAS pension. The claw back rate is 15%.
Vehicle Related information:
For 2018 CRA considers $0.55/km on the first 5,000 km driven and $0.49/km on any km’s driven after that to be reasonable reimbursement rates. (Add an extra $0.04/km for NWT, Yukon and Nunavut.) (2017 rates were $0.54/km on first 5,000 and $0.48/km thereafter)
Vehicle purchase ceiling:
$30,000 plus applicable sales tax is the maximum cost amount of a passenger vehicle on which CCA may be claimed for business purposes.
The limit on deductible leasing costs remains at $800/month plus applicable sales tax.
$300/month is the maximum interest deduction allowable on loans related to vehicles purchased after 2015.
If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.
Thanks to Sana Arbabzada of KWB Chartered Accountants for providing this content.