William Khalilieh, CPA, CA
Providing Accounting and Tax Solutions to Small Businesses in the GTA


2018 Federal Budget Tax Commentary

The 2018 Federal Budget was released on February 27, 2018.  The main highlight of the budget for small businesses wast the revised “Passive income” proposals.  There is still a negative impact on small business but the rules are simpler than the original proposals.

Why did the government just introduce these rules in the first place? The government would have saved the small business community a lot of time and energy if this was the original proposal.

Please see attached my analysis presented to members of the OnePlan Business Centre in Burlington, Ontario.

My response to the July 18, 2017 Tax Proposals

In my 2017 Budget analysis, I dismissed a comment made by the government as it was so vague. “To help ensure everyone pays their fair share of tax, the Government will identify and close tax loopholes and tax planning schemes that disproportionately favour the wealthy—including tax planning strategies that involve private corporations.”

Now we know what the Department of Finance was talking about.

Please read my submission to the Department of Finance.

Submission to Dept of Finance

Federal Budget 2017 Analysis: No big surprises

On March 22, 2017, Finance Minister Bill Morneau delivered his second budget.  Below are the key items that will impact you and your small business.

It should be noted that CRA is getting another $520 million to their budget. I would expect more CRA inquires and audits, especially if you are a small business owner.

Personal Tax Items

The big surprise is that there are no real significant changes to personal taxation given all the speculation leading up to the budget. For example, no change to tax rates, income splitting, to the principal residence exemption, the capital gains inclusion rate or taxability on employer provided health plans.

Nurses can now certify individuals for the disability tax credit.

Nurses are added to list of medical professionals that can certify an individual’s disability for the credit. Any help in getting qualified individuals the credit is always welcome.

Expansion of eligible medical credits for families trying to conceive a child

Use of reproductive technologies, even if not medically indicated because of a medical infertility condition will be allowed for 2017 and subsequent years and the ability to go back for the 10 preceding years at your choice. Going back 10 years is unusual, but claiming this credit could generate some significant tax savings.

Consolidation of Caregiver Credits

There are currently three types of caregiver credits: infirm dependent credit, caregiver credit, and the family caregiver credit. These will be consolidated into the new Canada Caregiver Credit for 2017 and later years. The big change to this credit is that parents who live with their children who are not infirm will no longer qualify for the consolidated credit.

You can receive your T4 by email

Before certain requirements had to be met before your employer could email your T4 slip. The requirements have been relaxed but you can demand to get a paper copy from your employer.

More institutions qualify for the tuition tax credit

Given Ontario’s lead in eliminating all post-secondary tax credits and last year’s elimination of the education and textbook amount by the federal government, I thought that this credit would be eliminated. Keeping this credit does show some commitment in education.

Elimination of Public Transit Tax Credit

Elimination of this credit is surprising given how much the country needs transit infrastructure. The elimination of this credit takes effect July 1, 2017. While, I won’t miss looking at Presto travel logs to figure out the correct amount of the credit, it is unfortunate for the credit to disappear because this credit could deliver some real tax savings, unlike many of the other former and existing tax credits.

Watch for mutual fund corporations to disappear

The government has made it easier for mutual fund corporations to change to mutual fund trusts.

Business Tax Items

The good news here is that there no major tax changes. After the last two budgets, this is very good news indeed!

Factual Control of a corporation

The government is making it easier for them to assert that you have control over someone else’s corporation even with no documentation. This is relevant for the small business tax rate.

Taxation of derivatives

The government is allowing an election to mark all derivatives owned to market if they choose. Once you elect in, you cannot elect out with the government’s approval. As well, straddle transactions are being curtailed. Losses on the “losing legs” cannot be recognized until the “winning leg” is recognized for tax purposes.

Billing for Professionals

Professionals must value their work-in-process at the end of the year and include that amount in income. To help facilitate the change for those taxpayers who currently exclude their work-in-progress, there is a one year transition period. This changes takes effect for the first taxation year after today.

HST Items

  • Uber and other similar ride sharing apps must charge HST.
  • Naloxone is not subject to HST

Other Items

  • Alcohol and tobacco taxes are increasing


This analysis is intended as a brief overview and does not include all the details to ensure you can take advantage of these rules as applicable.   Please contact me to see how these changes can impact you and your business. 


William Khalilieh is a Chartered Professional Accountant, based in Burlington, Ontario, who provides practical tax and accounting solutions to individuals and their businesses in the Greater Toronto Area.


Dealing with CRA in Oakville as a Small Business Owner

If you are a small business owner, then you worry about running your business successfully. You need to keep your customers and suppliers happy, meet payroll and work to expand. The last thing you need to worry about is being responsible for someone else’s tax debt. Unfortunately, the Income Tax Act and the Excise Tax Act can make your business responsible for paying your employees and your supplier’s tax debt. If you don’t comply, you will be dealing with CRA in Oakville collecting from you.

Obviously, the simple answer for dealing with CRA in Oakville is to comply with the order. If it is your employee that owes the money, you can deduct a percentage from their after-tax pay and remit directly to CRA. With a supplier, you send your payment to them directly to CRA instead of to the supplier, or the amount that they owe CRA – which ever payment amount is lower. Out of courtesy to your supplier or employee, you will want to explain to the employee or supplier what you are doing.

I’m discussing this rule because a client of mine recently faced this issue when dealing with CRA in Oakville. What made my client’s situation interesting was that we received a “Second Notice” without getting a “First Notice”. When I called the CRA collection agent, the agent informed me that she sent the First Notice to the taxpayer and not my client. Not exactly an effective method of collecting payment! The troubling aspect of it is that I may have to spend time to fix this error. Problems could arise if CRA sends the “Final Notice” to the taxpayer, rather than my client, and then begin to enforce a judgement against my client.

As I mentioned in a previous blog, always open your mail from the CRA! Dealing with CRA in Oakville doesn’t have to be difficult. If you don’t understand the CRA letter, please do not hesitate to contact me.

William Khalilieh is a Chartered Professional Accountant, based in Oakville, Ontario, who provides practical tax and accounting solutions to individuals and their businesses in the Greater Toronto Area.

2015 Federal Budget Summary & Analysis

Today the federal government released the 2015 budget to the public. Here are the highlights that will have an impact on you, your business, and your Toronto corporate taxes.

Personal tax changes

Lower minimum required withdrawals from Registered Income Funds (RIFs)

Easily the biggest change for personal taxes, this amendment lowers the minimum required withdrawal from your RIF if you are between 71 and 94. The amendment allows the minimum withdrawal to be approximately $17,885, and also  may allow seniors to keep or get the Guaranteed Income Supplement and/or Old Age Security.

Increase to the Tax-Free Savings Account Limit

The limit has been increased to $10,000. The limit will not increase any further. This is another beneficial change for seniors as well as those who have the funds to invest.

Home Accessibility Tax Credit

At the end of the year, this credit will allow people 65 or older and individuals who otherwise get the disability tax credit to claim expenses (up to $10,000) as a non-refundable tax credit (i.e. the credit can only reduce your tax bill to zero and not generate a refund) to help these individuals to continue to live in their home. Examples of expenses that qualify include wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars. While I am not a fan of these boutique tax credits, this credit is easy to support. Other “minor” changes:

  • Simplified reporting of foreign assets if your foreign asset is between $100,000 and $250,000.
  • Sales of qualified farming and fishing property are now valid for a $1,000,000 capital gain exemption rather than $800,000 (indexed to inflation) for small business corporations.
  • Registered Disability Savings Plans (RDSP) can still be opened by relatives of individuals who cannot enter into a contract – extended to 2018 from 2015.
  • Repeated Failure to Report Income Penalty is reduced for individuals who unintentionally failed to report income. This change benefits lower income earns who didn’t report income from CPP or something similar in cases where the tax was small compared to the income.
  • Procedural changes that make it easier for CRA to advance theories in tax litigation.
  • CRA agents can now share information between “tax” and “non-tax” departments.   For example, CRA will now be able to use income tax returns to determine an individual’s student loan repayments.
  • Changes to the Family Tax Cut that allow tuition credits to be used to help split income.

Changes to Toronto corporate taxes

Reduction in the tax rate to corporations that get the small business deduction (“SBD”)

Currently, corporations that qualify for the SBD pay 11% tax to the federal government. The tax rate will be reduced by .5% per year for the next four years to take it to 9% starting in 2016. This change is a bit of a surprise as it was not mentioned in any political commentary.

As a result of these changes, dividends received from these corporations will have a higher effective tax rate due to a lower  “dividend tax credit” resulting from lower Toronto corporate taxes being paid. However, a side effect of this change is that if your corporation earns rent and other passive income you may be better off taking some dividends out now to save tax overall.

New small businesses can remit their payroll quarterly

Currently, all new small businesses must remit payroll taxes monthly before qualifying to go quarterly. This change allows all small business to go immediately remit quarterly starting in 2016 assuming all of the qualifications are met.

Employment Insurance Premium Rate reduction

The rate will be reduced to $1.49 per $100 of earnings in 2017 from $1.88 per $100 of earnings in 2016. However, if Ontario goes ahead with its Ontario Pension Plan in 2017, you may not see this reduction.

Other changes that will impact your small business

  • The government is inviting comments on whether changes should be implemented in regards to the types of income that qualify for the small business deduction.  Businesses like campgrounds, hotels, and self-storage units that do not employ more than 5 full time employees are affected by these laws.  Any relief to these types of businesses would be welcome.
  • The government may release draft legislation regarding the conversion of the “eligible capital property” system into the regular capital cost allowance system sometime this year.

This analysis is intended as a brief overview and does not include all of the details to ensure you can take advantage of these rules as applicable.   Please contact me to see how these changes can impact you and your Toronto corporate taxes. 

William Khalilieh is a Chartered Professional Accountant, based in Oakville, Ontario, who provides practical tax and accounting solutions to individuals and their businesses in the Greater Toronto Area.