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Proposed Tax Changes
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How Proposed Tax Changes Could Impact You and Your Business

 

View the webinar presentation HERE

 

On July 18, 2017, the Honourable Bill Morneau, Minister of Finance, released draft legislation and explanatory notes intended to “close loopholes and deal with tax planning strategies that involved the use of private corporations.” If your business is privately incorporated you may be impacted by the proposed changes.

The government feels that making changes to the way some Canadians use the small business tax rules will improve the fairness of Canada’s tax system because “many of the richest Canadians are unfairly exploiting the tax rules designed to help businesses thrive.” The government has launched consultations, with an October 2, 2017 deadline specifically on amending the following three tax practices that are, from the government’s perspective, being used to gain unfair tax advantages:

- Income Sprinkling: Diverting income from a high-income individual to family members with lower personal tax rates, or to those who may not be taxable at all.
- Passive Investment Income: Some individuals retain investments in a corporation, taking advantage of the fact that corporate income tax rates are much lower than personal tax rates for higher-income individuals.
- Capital Gains: Converting a private corporation's regular income into capital gains to take advantage of the lower tax rate.
More information on these specific measures and proposals can be found in the Technical Briefing Deck: Tax Planning Using Private Corporations.

MNP has created a summary overview of the proposed changes, as well as separate in-depth analysis pieces on the impact to the three targeted tax planning strategies.


MNP Tax Update Part 1: Income Sprinkling
MNP Tax Update Part 2: Holding Passive Investments Inside a Private Corporation
MNP Tax Update Part 3: Converting Income into Capital Gains

 

The measures introduced on will have a significant impact on tax planning for private corporations. MNP will be working to determine the potential effect of such changes and how to mitigate the impact of these changes. We will also be active in the government’s consultation process to ensure that voices of all industry participants are heard moving forward.
For more information please visit the MNP LLP website HERE

If you feel you may be impacted by these changes, we encourage you to submit a letter through the public consultation process by the October 2 deadline and immediately contact your Member of Parliament to obtain more information about what this means for you.

The government lays out these proposals in more detail and invites public input in their White Paper. Written comments may be sent directly to fin.consultation.fin@canada.ca.

 

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