As you will have no doubt heard or read through the news media, the federal Department of Finance has released their discussion paper on the use of private corporations for tax planning.
The Department is inviting public comments until October 2, 2017 with a planned implementation of any tax changes in early 2018.
The proposed measures would mean significant changes to four areas:
1. Splitting income with family members.
2. Limiting access to and multiplication of claims by individuals of the lifetime capital gains exemption.
3. Converting a private corporation's regular income into capital gains.
4. Holding passive investments inside a private corporation.
We know that many of you, our valued clients, would be impacted by these proposed changes and while it is early days in the process, we want to assure you that we actively engaged with DFK Canada, our nationwide affiliation of member accounting firms, in developing responses aimed at protecting our small business clients from potentially damaging implications of the proposals as they are now written.
This is the first of what will be several messages to you on this topic. We will keep you informed as our response to the Department of Finance develops and we will be working hard to ensure that both the Minister and his staff clearly understand the financial complexities of operating a successful small business and the benefits of keeping this vital component of our economy financially viable and vibrant.
MRSB tax staff members are currently studying the proposals which can be found here: http://www.fin.gc.ca/activty/consult/tppc-pfsp-eng.pdf.
We welcome your input by sending along direct comments to this newly-created email address: firstname.lastname@example.org.
MRSB partners and managers, as always, are also here to discuss directly any concerns you might have.
Terry Soloman, CPA, CA, TEP