Small Business Scores Small Win Against Big GovernmentFederal Government Backs Down Somewhat on Controversial Tax Changes
Calgary, Alberta, 16 October 2017- After considerable opposition and criticism, much of it expressed in over 21,000 submissions received by Finance Canada, the Government of Canada today announced concessions to its proposed small business tax changes previously announced on 18 July 2017.
The story has some rays of sunshine for taxpayers, however significant storm clouds remain.
The Good News
Announced today are the following key changes:
- The federal small business tax rate will be lowered to 10 per cent, effective January 1, 2018, and to 9 per cent, effective January 1, 2019; and
- The Government will not be moving forward with proposed measures to limit access to the Lifetime Capital Gains Exemption.
The Bad News
However, it is not all good news for entrepreneurs, farmers and professionals:
- The Government also announced they are continuing ahead on their plans to eliminate the ability to ‘sprinkle’ income among family members; and
- The Government has not yet detailed its plans for amending the taxation of passive investment income held by private corporations. Many unintended consequences have been identified in the prior proposals and taxpayers are left dangling until clarification is provided.
The Government is keeping business owners on edge by announcing that there will be further changes in coming days; the Government will not even release its legislative proposal until later this fall, with the intent that such proposals will be effective beginning January 1, 2018.
We expect that most our current referral partners and advisors will need to review and possibly amend the strategies they are using to reduce their taxes before the end of 2017. Despite years of prudent planning, taxpayers may only have a brief time to make major changes to their personal affairs.
To discuss how these changes might affect your business please contact:
Arthur V. Olson
Barrister & Solicitor
Download a PDF version of this news release here.