Government coming to its senses on taxation of passive incomeNew threshold should afford business owners flexibility to grow their business
Calgary, Alberta, 18 October 2017- Today the federal Minister of Finance announced that while the Government of Canada will continue to increase taxes on passive investment income of private corporations, they have decided to allow the first $50,000 of passive investment income to be taxed at a lower rate. This concession comes after a short consultation period on proposed tax changes that were widely opposed by small business owners. The proposed concession should allow farmers, entrepreneurs and professionals some flexibility to grow their businesses and save for a rainy day, but without details from the Finance Department, there is some uncertainty over how much flexibility is being provided.
In principal, this is good news for farmers, entrepreneurs and professionals as it creates breathing room to deal with challenges of running a business. However, the Government will not provide details until it releases Budget 2018, in which they will include a technical description of how these measures will be applied.
All clients, but especially those with significant passive investment income (i.e. greater than $50,000) should be reviewing their tax plans before the end of 2017.
To discuss how this new passive income investment threshold might affect your business please contact:
Arthur V. Olson
Barrister & Solicitor
Download a PDF version of this news release here.