Changes to the Canadian and Alberta Tax Regimes
In recent months, both the Canadian and Alberta Governments have increased the personal tax rates for the wealthiest segments of the Canadian population. In Alberta, individuals at the highest income level can expect to see an increase of 7.75% in their top marginal tax rate starting on January 1, 2016. As a result, where cash flow allows, some high income earners are planning to pay a compensation adjustment to be disbursed on or before December 31, 2015.
Relevance to SR&ED
For those business owners who are involved in SR&ED, the form that their compensation adjustment takes can impact their companies’ SR&ED claims. Where there is an option and it is legitimate to do so, business owners should preferentially take income as a “salary adjustment” rather than a “bonus” since bonuses are not SR&ED eligible.
Further information related to these tax changes is available on the following websites: www.alberta.ca/budget/revenue.cfm and www.cbc.ca/news/politics/house-passes-liberal-tax-plan-1.3357143
You can also contact TSGI for information related to how any decision may impact a company’s SR&ED claims.
Note: TSGI does not maintain this news article after its initial posting. Readers are further advised that the information presented here may not be sufficient for unassisted tax planning. Please contact a TSGI representative if you require clarification or other assistance regarding this topic.