A lot of
people have been asking me - “What can
you tell me about the proposed federal tax changes announced on July 19, 2017
and their effect on small business”.
The federal government says that the Finance’s
proposals in general, “improve the fairness of Canada’s tax system.”
While people such as Jesse Brodlieb, partner in Dentons’ taxation
group in Toronto, disagree. “The average wage earner doesn’t have the same risk
profile as the average small business owner, and the tax rates ought to reflect
that,” he says.
One of the best letters I have seen on this
subject, was written by Dr. Deepa
Soni. You can check it out here
Here is what
you need to know:
First, these are only proposals. You can check out
the full document by clicking here.
Second, they potentially affect anyone who
owns a Canadian-controlled private
corporation, including those who have a Professional Corporation (i.e.
doctors, lawyers, dentists, financial planners, etc.). FYI – this proposal also affects independent
farmers.
Third, the proposal
focuses on three main areas identified in Budget 2017:
·
Sprinkling income
using private corporations (i.e. paying family members, when no work is
performed)
·
Holding a passive
investment portfolio inside a private corporation (i.e. neutralize the
tax-assisted financial advantages of investing passively through a private
corporation
·
Converting a private
corporation’s regular income into capital gains (i.e. to prevent the surplus
income of a private corporation from being converted to a lower-taxed capital
gain, and stripped from the corporation
What
you should do:
·
Write
a letter to your Member of Parliament outlining your
concerns. Click here to find their contact details.
·
The Government is accepting submissions on these proposals until
October 2, 2017. Send your comments to - fin.consultation.fin@canada.ca
·
Talk to you tax advisor to determine what necessary planning should be
considered and what changes should be implemented should the proposed measures
be finalized and passed into law
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