Canada's Private Corporation Tax Proposals: Year End Planning in the Face of Uncertainty

Advanced Filters

Please search by first or last name. e.g: "John" or "Smith". Your search will begin after typing at least 2 characters. Searching...
Sort by: Relevance | Name

We are pleased to provide you with detailed biographies on our lawyers, paralegals and administrative team, so you can learn more about how we can best support your business' success.

Use the search bar above or the advanced filters to further narrow your search by service, industry, office location, bar admissions, title, education and language.

: Service; Industry; Office; Position; Bar Admission; Education; Language

Contact Form

: Contact

We want to hear from you: Did we delight you with great service or a timely insight? Did we miss the mark? Are you looking for legal advice? If so, we want to know. Just type a few lines into our form, send an email to client.service@mcinnescooper.com, or call 1-855-622-6668.

Charlottetown

141 Kent St., Suite 300
McInnes Cooper Building
Charlottetown, PE
C1A 1N3

Tel: 902.368.8473
Fax: 902.368.8346

Fredericton

570 Queen St., Suite 600
Barker House
Fredericton, NB
E3B 6Z6

Tel: 506.458.8572
Fax: 506.458.9903

Halifax

1969 Upper Water St., Suite 1300
Purdy’s Wharf Tower II
Halifax, NS
B3J 3R7

Tel: 902.425.6500
Fax: 902.425.6350

Moncton

644 Main St., Suite 400
Blue Cross Building, South Tower
Moncton, NB
E1C 1E2

Tel: 506.857.8970
Fax: 506.857.4095

Saint John

1 Germain St., Suite 1700
Brunswick Square
Saint John, NB
E2L 4V1

Tel: 506.643.6500
Fax: 506.643.6505

St. John’s

10 Fort William Pl., 5th Floor
Baine Johnston Centre
St. John’s, NL
A1C 1K4

Tel: 709.722.8735
Fax: 709.722.1763

More Publications

Publication

Canada’s Private Corporation Tax Proposals: Year End Planning in the Face of Uncertainty

November 20, 2017

By Jeffrey Blucher, at McInnes Cooper

October 2, 2017 marked the end of the consultation period relating to the taxation of private corporation proposals the Department of Finance (Canada) released on July 18, 2017. The government received over 21,000 written submissions during the consultation period. Since the consultation period ended, the government has made a series of announcements about its July 18, 2017 proposals. Although these announcements are welcome changes to the initial proposals, much uncertainty remains. However, there may still be tax planning steps that private corporations can implement in 2017 to best position themselves for the pending changes, even in the face of this uncertainty.

THE ANNOUNCEMENTS

After the consultation phase ended, the government released a series of announcements about its proposals:

October 16, 2017. The government announced that it will:

Not proceed with the proposed measures to limit access to the capital gains deductions.
Simplify the proposed measures to limit income sprinkling, so that these measures will not affect spouses, children and other family members who make clear and meaningful contributions to the business.
Lower the small business tax rate to 10% on January 1, 2018 and to 9% on January 1, 2019.

October 18, 2017. The government announced it will proceed with measures to limit the tax deferral opportunities relating to passive investments, and will release draft legislation relating to passive investments as part of Budget 2018. The government stated these measures will:

Allow past investments, and the income from those investments, to be protected.
Allow businesses to save for contingencies or future investments in growth.
Create a $50,000 annual threshold on passive income.
Have incentives to ensure venture capital and angel investors can continue to invest in Canadian innovation.

October 19, 2017. The government announced it will not proceed with the proposed measures relating to the conversion of income into capital gains. It also announced that in the coming year it will develop proposals to better accommodate intergenerational transfers of businesses.

October 24, 2017. In the Fall Economic Statement delivered on October 24, 2017, the government confirmed it will release revised income sprinkling legislation later in Fall 2017.

THE REMAINING UNCERTAINTY

These announcements are welcome changes to the initial proposals, but much uncertainty remains although there may still be tax planning steps that private corporations can implement in 2017 to best position themselves for the pending changes:

Income Sprinkling. It is unclear how the government will simplify the income sprinkling proposals. The October 16, 2017 announcement indicated a reasonableness test will remain part of the final legislation. There is speculation spouses may be excluded from the final income sprinkling restrictions, and the age limit may be fixed at age 24. It is also unclear whether capital gains will be excluded from the income sprinkling measures if they are eligible for a capital gains deduction, although this seems a reasonable inference from the government’s announcements. Taxpayers must await the Fall 2017 final legislation for answers to these questions. In the meantime, taxpayers should begin seeking professional advice as to the steps they should be considering before the end of 2017, such as ways to maximize distributions to family members at available marginal rates.

Passive Investment Rules. There is also uncertainty as to the details of the final passive investment rules, which will not be resolved until 2018. Until then, taxpayers should consult with their tax advisors to discuss the currently available information. There may be steps taxpayers can implement in 2017 to take full advantage of the anticipated grandfathering aspects of these measures.

Please contact your McInnes Cooper lawyer or any member of the Tax Solutions Team @ McInnes Cooper to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

© McInnes Cooper, 2017. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Email us at publications@mcinnescooper.com to request our consent.

People

Services

Industries

Publication

August 4, 2017

Proposed Changes to Business Income Tax Rules: A Gamechanger for Private Business Owners

On July 18, 2017, Canada’s Minister of Finance released proposed changes to the Income Tax Act (Canada) that, if implemented,...

We are pleased to provide you with detailed biographies on our lawyers, paralegals and administrative team, so you can learn more about how we can best support your business' success.

Advanced Filters

Contact

We want to hear from you: Did we delight you with great service or a timely insight? Did we miss the mark? Are you looking for legal advice? If so, we want to know. Just type a few lines into our form, send an email to client.service@mcinnescooper.com, or call 1-855-622-6668.

Charlottetown

Fredericton

Halifax

Moncton

Saint John

St. John’s

Send Us Feedback

Un moment s'il vous plaît...

We are pleased to provide you with detailed biographies on our lawyers, paralegals and administrative team, so you can learn more about how we can best support your business' success.

Advanced Filters

Contact

We want to hear from you: Did we delight you with great service or a timely insight? Did we miss the mark? Are you looking for legal advice? If so, we want to know. Just type a few lines into our form, send an email to client.service@mcinnescooper.com, or call 1-855-622-6668.

Charlottetown

Fredericton

Halifax

Moncton

Saint John

St. John’s

Send Us Feedback

Un moment s'il vous plaît...

Share this with others

Twitter

Facebook

Google +

LinkedIn

Email