• Canadian Tax FAQ
    What are the proposed Canadian tax changes?

    By Gilmour Group CPAs

    25-08-2017

    Facts

    On July 18, 2017, the Canadian government proposed tax changes in an effort to remove tax advantages that small business owners have and address aggressive tax planning strategies involving the use of private corporations. These proposed changes are open for discussion until October 2, 2017, before being formally submitted for legislation.

    Discussion

    These proposed changes have three main areas of focus. In this series, we will discuss each of these areas and their impact to your private corporation.

    1. Sprinkling income using private corporations: Restrictions on income splitting to family members through dividends and capital gains by introducing reasonability tests on dividends and providing restrictions on the eligibility of the Lifetime Capital Exemption on capital gains.
    2. Passive investment portfolios held inside a private corporation: Neutralizing financial advantages of investments held within a private corporation by increasing taxes on passive investment income.
    3. Converting private corporation’s regular income into capital gains: Preventing private corporations from converting surplus income to a lower-taxed capital gain and stripping it from the corporation.
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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

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