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This morning, Prime Minister Justin Trudeau and Finance Minister Bill Morneau announced a
reduction of the Small Business Tax Rate to 10% in January 2018 and 9% in January 2019.
In addition to the reduction of the Small Business Tax Rate, it was announced that changes to previously proposed tax amendments would be forthcoming. The proposed amendments, which CFA has been actively engaged on, focused on three major areas the government considered to be 'tax loopholes'. The proposals are set to be adjusted in the following ways:
- Sprinkling income using private corporations - Effective January 2018, business owners will retain the ability to income split with family members who can demonstrate they contribute to the business; further details on the exact mechanism used to demonstrate this are not yet available.
- Holding a passive investment portfolio inside a private corporation - New parameters for the treatment of passive investment in private corporations will be announced, but are also not yet known.
- Converting a private corporation's regular income into capital gains - The government will abandon this plan altogether.
CFA members were instrumental in amplifying the voice of the franchise community, with over 300 letters sent to Members of Parliament across the country. Specific details on these changes will be released over the course of the next 3 days, and CFA will continue to update members as they become known.
If you have any questions about the reports or any other advocacy issue, please contact Ryan Eickmeier, Vice President, Government Relations & Public Policy, at [email protected] or phone 416-695-2896 ext. 297.
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