According to a recent report by the Chartered Professional Accountants of Canada, our tax system has been described as “outdated” and “overly complex”. The nature of how we’ve designed it has meant negative consequences on both taxpayers and business owners.

There’s no disputing that Canada’s tax system sometimes seems to be endlessly complex. Some have argued the tax system does not do enough to help businesses grow, while others will demonstrate there’s a lack of compliance with the tax system among corporate clients. In an effort to deliver maximum social benefit, the government has focused on tax expenditures – something which the CPA has criticized for the complexity it adds in.

It’s been years since the CPA first requested a comprehensive review of Canada’s tax systems. Countless other organizations have followed suit with their own requests, including the CD Howe Institute, the OECD, and our Senate’s own finance committee.

In the CPA Canada report, they maintain the more complex the system is, the more this is shutting out low-income Canadians from benefiting from certain income supports. Subsequently, it also challenges small business owners with ever-changing conditions that they must comply with. If the report’s to be believed, the ultimate result of our complex tax system is a loss of competitive edge in personal and corporate taxes, and discouraging foreign investment.

The tax system has been one of several systems wherein there’s constant battle between business/corporate interests and that of the general population. On one hand, the lower and more simple the tax rate is, the more jobs that can be created, the more investment Canada can attract from foreign stakeholders, and the more competitive we can be among companies selecting between us and United States for headquarters, manufacturing facilities, and more.

On the other hand, there’s been call to grant Canadians more income supports to combat rising inequality, to incentivize education in an attempt to motivate labor force growth, and more.

Can all interests be satisfied in our tax system – in some cases, yes and in other cases, definitely not. This is why low-income and vulnerable Canadians do not have enough income supports while simultaneously Canada has lost its corporate tax advantage compared to the US and elsewhere where rates have fallen.

Tax = government income. When one lowers the tax rate, they lower the income the government has to use to provide services and make investments. Canada’s been hesitate to lower the corporate tax rate at the same intensity of similar countries because we don’t want to lose that income.

Beyond these issues, there’s also the complexity of the tax system which needs to be highlighted. When a small business owner or everyday Canadian is unclear on how to file, what they can claim as expenses, or what they’re eligible for, risk of non-compliance rises. Aligning ourselves with the CPA Canada report, we believe there’s an unreasonable level of complexity as it pertains to Canada’s income tax, GST/HST, and corporate tax systems. It is an imperative that we fix our tax system, not only to allow our business environment to remain competitive internationally but to help everyday Canadians receive the tax support they are eligible for.

As years come and go, with them comes new tax laws. For everyday Canadians, business owners and independent contractors, you may see some noticeable differences with your tax rate and what you can claim this year. For example, the small business corporate tax rate has been reduced to 10 percent in 2018 and will go down again to 9 percent come next year. Counting down some of the other major tax changes you may have heard about, here are a few things to look at.

New EI parental sharing benefits.

When both parents agree to share a parental leave, they are now able to claim an additional five weeks of benefits. This was added to 2018’s budget as a supplemental parental sharing benefit.

Eliminating the home relocation loan.

For the first time, no longer can you claim home relocation loans deductions for this year and any year to come.

Higher rates for accelerated capital cost allowance.

For Canadian business owners claiming CCA, they are now able to tap into what’s called ‘accelerated investment incentive’. This provides business owners 150 percent of their normal CCA rate which can be claimed in the year of purchase. Previously, the amount one could claim in the year of purchase was subject to a half-year rule. Simply put, what these business owners can claim has just tripled.

Pension splitting for veterans.

Retirement income security benefits received by veterans are now eligible for pension income splitting. A great detail of this is it’s retroactive to 2015 as well. The amount split is subject to a cap of $103,056 for 2018’s tax return.

‘Working while on claim’ rules.

Working while on claim rules now apply to sickness and maternal benefits. If you’re on maternity and you decide you want to return to work before your EI benefits are set to end, an adjustment needs to be made. Normally, a claimant is permitted to receive 55 percent of their weekly salaries for EI benefits. When they return to work, 50 cents from every dollar they earn must be subtracted. The amount they end up with is subtracted from overall EI benefits.

More medical expenses you can claim.

A taxpayer who has severe mental impairments are now allowed to claim the cost of animal care for a service animal. If you’re animal has not been specially trained however, they’re not eligible.

Climate action incentive.

Residents in New Brunswick, Ontario, Manitoba, and Saskatchewan are now eligible for a tax credit called the ‘Climate Action Incentive’. The average household is eligible for the following: $248 in NB, $300 in Ontario, $336 in Manitoba, and $598 in Saskatchewan. Clients living in rural areas may be eligible for up to 10 percent more than people living in cities, as rural households are likely to use more energy and don’t have the same public transportation options to reduce fuel consumption.

Canada Workers Benefit.

Formerly known as the ‘Working Income Tax Benefit’, the Canada Workers Benefit incentivizes participation in the workforce among low-income individuals. Amounts have increased this year to a maximum benefit of $1,355 to single individuals without children and $2,335 for eligible families.